How to Bootstrap a Startup with Less Than $100K Capital with Sahar Saidi: An EOFire Classic from 2021

0:01Boom! Shake the room, Fire Nation! JLD here and welcome to Entrepreneurs on Fire! are brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like I Digress. Today, we're pulling a timeless EO Fire episode from the archives, so the giveaway may not be active, and we'll be breaking down how to bootstrap a startup with less than$100 ,000 capital with Sahar Saidi. Sahar is the founder and CEO of Lust Brands Love Yourself. They make hair products for curly hair that actually works. In today's foundation, we'll talk about getting rid of your safety nets.

0:35We'll talk about if you have a good product and it works, people will tell their friends and family about it. Referrals are everything and how to get those and so much more. And a big thank you for sponsoring today's episode goes to Sahar and our sponsors. The Hustle Daily Show, hosted by Juliet Bennett-Ryla, Rob Litters, Ben Berkeley, and Mark Dent, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. The Hustle Daily Show brings you a healthy dose of irreverent, offbeat, informative takes on business and tech news, like a recent episode on Hackers vs.

1:06Casinos, where the hosts talk about MGM Resorts and Caesars Entertainment and the devastating potential of cyber attacks. Listen to The Hustle Daily wherever you get your podcasts. Is now your time? Visit thrivetimeshow.com to see testimonials of how Clay Clark's business coaching has helped over 2 ,000 entrepreneurs to dramatically increase profitability. It's month-to-month and less money than an average minimum wage employee. Schedule your free consultation today at thrivetimeshow.com. Sahar, say what's up to Fire Nation and share something interesting about yourself that most people don't know.

1:41What's up, Fire Nation? Sahar here. Really excited to speak with you guys today. Something interesting about me that most people don't know is I quit my corporate job in my 20s and moved to the Caribbean for a few years before coming back up to North America and diving back in to everything I'm doing now. Well, where specifically in the Caribbean? Because you're talking to a Puerto Rican right now. Oh, nice. Turks and Caicos. Oh, very cool. Haven't made it to that one yet. Do you recommend? 100%. I have to go to Turks and Caicos. I've been to Puerto Rico though. Beautiful. Yeah. Puerto Rico is great.

2:14And I'm looking forward to exploring a bunch more of these lesser Antilles islands, as you recall. We've been to a bunch, but we still got a bunch more to do. And Fire Nation, we're talking with Sahar today about how to bootstrap a startup with less than$100 ,000 capital, which by the way, most people don't really think is possible, but I want to just start by asking you, Sahar, why? Why did you decide to bootstrap your company instead of going after the traditional investor capital? Well, it wasn't from lack of trying, that's for sure. I mean, I put together a beautiful business plan and I knocked on so many doors and none of the investors I was approaching before I started my company thought a shampoo company would make it, let alone become highly profitable and be a fast growth DTC brand.

2:58So it wasn't so much a decision to bootstrap so much so as, hey, if I don't do this, then there's no way my company is going to get off the ground. So Fire Nation, when life hands you lemons, you just make that less lemonade. And it's exactly what Sahar has been able to do over the years. If you actually just go and check out some YouTube videos, you'll be able to see kind of the evolution, you know, as it's evolved. And I really found it cool as I was doing some research for this episode. And I'd love to know Sahar from you, if you could just think about that exact moment when you first knew you had product market fit.

3:35I mean, you knew from the back in the day that you had something that was going to work, but just because it was going to work, it doesn't always mean it's going to get traction. So what was the moment you were like, okay, product market fit check? I mean, yeah, it really did start before I even went live with the site. I used to use my friends and family as my guinea pig. So I I would pick up product samples, distribute them around the city of Toronto. Anybody that had wavy, curly, kinky, coily hair was testing product for me. And I think what really did it for me is everyone would get these small sample sizes.

4:08And they were just on me all the time as to when are you launching? We need more. We've never tried anything like this. And so I think it was just that early feedback. And even though they were friends and family, they were willing to pay for this stuff. And I thought, okay, I've got gold here. And I mean, that's really what made me put my own money into it and back the company and just get started. But it wasn't until a few months after launching that our sales really started to pick up that I knew, OK, we're onto something here. I mean, Fire Nation, when people are willing to vote with their wallets, that's the key.

4:40That's a critical factor. So many times I've seen myself, by the way, it's happened to me. And so many people in my audience be like, oh, I know I had this great idea. And all of my friends and family, they agree with me. They nod their heads up and down like, yeah, that's a great idea. You should definitely do that. And then, oh, I spend months and months concocting the idea and working on it. Then I release to the public and nobody buys. And I go to my friends and my family and I was like, oh my God, but you told me it was awesome. And they were like, well, yeah, for somebody, but like, I'm not going to buy.

5:08I don't need this. I don't, it has to solve a real pain point. It has to be such a struggle, such a solution to that struggle that people would be willing to part with their hard earned money. And that is such a key thing so hard that you shared is that your family and friends are willing to pay you right off the bat for this because they needed it. They wanted it. So once you started to get that early traction, who was your first hire? That's always a tough decision. Yeah, my first hire was in customer service. So we launched, you know, direct to consumer. It's a website. We're selling hair care products for curly hair.

5:42So we're doing pre-sales support and post-sales support. And it was just me doing all of our social media, all of our email. and it was getting overwhelming. And really, really early on, one of our customers who lives in Florida, she reached out to me and she was kind of an influencer in her own right. And she was just like, I love this stuff. I would volunteer for you. And I said, great. How about a job? Here's customer service. Please take over. And she stepped in, kind of mimicked my tone, learned really quickly. And, you know, she's still with us today. That was January 2017 when she joined.

6:15And, you know, fast forward, you know, to today, she's our community manager and customer service was definitely the first, first role I had to fill for. So, yeah, and I was really lucky that she came to me and, you know, I didn't have to go out and source that first hire. I love those stories and Fire Nation. You should be looking towards your raving fans. Like who are people that know the product, that believe in the service, that utilize a product, they use the service that are telling their friends and family. I mean, those are your advocates. Those are your evangelists. Leverage that opportunity for sure.

6:50So you got that first person in the door, they're taking some heat off of your plate because you know, you're having to do your thing and get out there and market and promote and do other things. Who's your second hire? Sales and marketing. Because very quickly I realized that I am not going to learn Facebook marketing and as a DTC brand, you know, you, you kind of rely on these social media platforms to start advertising. And I kind of played around with it on my own for the first couple of months. Then three months after launching, I hired a freelance consultant on Upwork and she had self-taught herself Facebook marketing.

7:26And she said, look, I'm not going to make you a lot of money, but I'm also not going to lose your money. I'm pretty sure I can break even. And I said, that's kind of good enough for me at this point. So she started with a very small monthly budget, of a thousand bucks a month, which I micromanaged. And eventually she joined us full-time, moved from Ohio here to Toronto, Canada. And today she's our director of sales and marketing, has built out a fully in-house sales and creative team, and she still runs our digital ads in-house. We don't use agencies, but yeah, she was a critical, critical first hire.

7:59And I attribute a lot of our success to her. DTC. And what that means, Fire Nation is direct to consumer. And that's what LUS is. They're direct to consumer. And guess what? When that happens, when you're running a business like that, you need to get the word out somehow. And of course, social media, advertising via social media is a great way to do that. And Sahar, you have what I like to call a sticky product, which means if and when people use it once and they love it, they're going to be using it again and again and again. And they're going to be telling their family and friends about that.

8:34So you have a great product for something like a Facebook marketing. Cause if you can just break even on your initial sale, guess what? In the longterm over the long haul, you're going to be winning big because they're going to be going back to you over and over again to buy the product as they run out, as you continue to have Ascension models for them, for different product lines as they need it, whatever that might be. And that is such a critical thing to realize, Fire Nation. If you have that sticky product, the people are going to need more than just a one-time purchase. You can factor that into your advertising and say, hey, breaking even is a huge win because in the long run, we're going to win on a massive, massive way.

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12:11Clay Clark himself today at thrivetimeshow.com. Knowledge will not attract money unless it is organized and directed through practical plans of action. Become the next success story. Schedule your free 13-point assessment today at thrivetimeshow.com. So Sahar, you and your team grew fast. I mean, lightning speed in certain areas at certain times. How did you do that? We did, and I attribute a lot of it to having really good products that actually work, Like you just said, you know, if you have a good product and you have a sticky product and it works, people are organically going to go and tell their friends and family about it.

12:48So I think that was really important to our growth. But really, it goes back to our efficiency in digital advertising. I mean, most DTC brands, they kind of rely on this retention model that, hey, it's OK for us to break even or even lose money on the first purchase because eventually over time we're going to break money and break even and make money. That was never our goal. We wanted to build a profitable company right from the first purchase. We wanted to build a company where the unit economics makes sense, it's sustainable, and we're not just relying on Facebook to grow. So we worked on creative.

13:24We had super low creative costs. Our customers would actually create videos, send them to us, and we featured them in ads. So instead of using influencer marketing, we turned normal people into micro-influencers by using our ad platforms. So it was really win-win and it was a great strategy that worked incredible for us for, you know, many years. And then just now going into our fourth year, we're starting to diversify off of social media advertising into other traditional channels like television. But yeah, I think just being able to nail the price point, to nail the brand and the strategy, and then being super, super efficient with our advertising spend, having low acquisition costs right from that first purchase allowed us to use our retained earnings to fuel our growth even faster.

14:08See, that's so cool because people can relate to people. And I love how you did that, Sahar. I mean, yeah, it's one thing to have these beautiful influencers and these perfect individuals, but at the same time, they're like, oh, well, that looks good on them, of course, because they're beautiful and they're perfect and whatever it might be. But when you can actually just see yourself in the ads and you can say, oh, wow, that looks like my mother or my brother or whoever it might be or myself, like people can relate to that, you're winning. And so, I mean, that's just, to me, a great way, especially in the age we live in right now, where it's like a people-to-people sell and sale.

14:44That's Fire Nation where you can really say, hey, how can I just continue to leverage my audience? Like Sahar did, by the way, for her first hire, for the second person that she brought on, and now for the actual ads and promotions that she's running, it's so meaningful. And so you grew so fast. You had a lot of success in a lot of different areas. And you bootstrapped. I mean, there's so much to be said for that. But now, hey, you're a success. You have product market fit. You have traction. Did you ever end up taking investor capital? We did. So a few months after launching, I applied to YC, the Y Combinator program in Silicon Valley, and we got rejected.

15:24And I said, okay, no problem. Let me go and put some sales up and I will come back. And I reapplied. And on the second go, we did get accepted. So we went through the Y Combinator program, which of course is one of the largest tech accelerators in the world and where companies like Airbnb and Stripe got started. So it was quite an honor getting into YC and, you know, temporarily relocating to California from Toronto and being amongst all those incredibly smart people. So we took capital from YC. And then when we finished the YC program, we raised a small seed round from notable angels and venture capital firms like Sound Ventures, which is owned by Ashton Kutcher and Comcast and just a lot of great angels who've been super helpful to me as advisors.

16:09I'm a solo founder and I kind of took capital not because we needed the money because we were already profitable at the time, but more so for me to build out this advisory board with individuals who had complementary skill sets and experiences to my own that I could pull on over the years that I build out the company. So yeah, we did take capital. We've never used the capital, but it's been great just getting the right investors behind us. And it's interesting, Fire Nation, to think about it in that manner that Sahar's talking about as well, because guess what? One advisor that she has, like one connection, one piece of networking that results from that, I mean, that can turn into an acquisition, that can turn into a merger, that can turn into so many things that wouldn't have otherwise been available.

16:53Because, you know, I mean, let's be honest, you know, Sahar is up in Toronto working on her business, but you know, she's not networking, getting it out there. Nobody might hear about it that could do those connections and have those type of mergers and acquisitions that could be possible if that's a road that Sahar ever wanted to take down that path. And let's talk about the difference, the difference about LUS compared to other DTC, those direct to consumer brands. How do you differentiate yourself and what do you think makes you different? I think being profitable is a huge differentiator. And even when we talk to investors and potential acquirers, I mean, they're all shocked to see our financials and kind of look under the hood and see that the unit economics makes sense as though we were a traditional brand because most DTC brands historically have really relied on that retention curve and, you know, CAC to LTV analysis.

17:46And it's fine. I mean, it tells a story, but it's not always true. It doesn't always pan out. Whereas, you know, when you're running a company where the unit economics makes sense, regardless of your retention curve, you're saying, hey, look, we're profitable on first purchase. We can continue to use our retained earnings to grow. And our company doesn't actually need cash to meet our revenue targets down the line. And I think that's really, really different for a DTC brand. It is kind of funny in a way to be like, it's different and weird to be profitable, but it is kind of crazy in this world that we live in that that is just absolutely the case, that it is different and unique to be profitable.

18:26In fact, the last conversation I was having was about how Facebook acquired WhatsApp and WhatsApp was hemorrhaging money. I mean, it's not even like they weren't profitable. I mean, they were just absolutely just throwing money out the windows, but they had a billion users. So, you know, Facebook wanted those billion users and, you know, at some point Facebook's going to be able, in their mind, hope to be able to monetize that and make that a profit machine. But, you know, there's the other route to go, which is like, oh, well, we actually have money. We have retained cash and capital that we can use to grow our business in a very sustainable way.

19:00So if and when there is something that happens in the market or in the economy or wherever it might be, you know, we're going to live to fight another day when all these other, you know, people in our industry, our peers, our competition, you know, they're going out of business because, you know, they were just barely scraping by month to month, paycheck to paycheck. You know, here we are comfortable with a war chest ready to do and battle. So Sahar, you shared a lot of awesomeness with Fire Nation today. I mean, I haven't taken notes about different ways that you can approach and look at things differently.

19:32And again, going back to something that you and I have both mentioned, which I think is so critical for our listeners is the stickiness of a product, which you have definitely proven that model. What's the one thing you want to make sure Fire Nation really gets from everything we talked about today? I'm going to give advice that's probably, you know, different than anything else anyone tells you, which is get rid of your safety net. And if you have a product or service that you believe in, even if no one else believes in you and you can't raise investor capital, just figure it out. Get a grant, get a small business loan, fund it through friends and family and just do it.

20:06You know, if I hadn't done that, there's no way lust would be what it is today. So don't wait on investors and don't don't wait. Just just do it and throw away your safety and go all in. Go all in. I love that. Now, where can Fire Nation connect with you and maybe share a little bit about how they connect with your brand, LUS? Yeah. So LUSbrands.com, L-U-S-B-R-A-N-D-S and LUS stands for love yourself. Hopefully that's easy to remember. So LUSbrands.com and we've got around the clock customer service. You know, there's literally girls with real curly hair all over answering social media, Facebook, Instagram, all us brands and email.

20:50So that's the best way to connect with my team and I. Love it. And next time you come down to Puerto Rico, I mean, this humidity, I mean, curly hair, you know, it's a, it's a dangerous combination. So I'm sure you were breaking down some product. We have a lot of customers in Puerto Rico. Oh, Fire Nation, you're the average of the five people you spend the most time with. And hello, You've been hanging out with SS and JLD today. So keep up that heat and head over to eofire.com. Type Sahar, S-A-H-A-R in the search bar. Her show notes page will pop up with everything we've talked about today. Direct links to all that jazz.

21:25Lussbrands.com, L-U-S-B-R-A-N-S.com is the website to learn more about all the awesomeness that they have going on. And Sahar, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we will catch you on the flip side. Sounds great. Thanks so much. Hey, Fire Nation. Today's value bomb content was brought to you by Sahar. And are you ready to rock your own podcast? Well, if you are, check out our free podcasting course where I teach you how to create and launch your own podcast for free. Visit freepodcastcourse.com. freepodcastcourse.com.

21:59I'll catch you there, Fire Nation, or I'll catch you on the flip side. The Hustle Daily Show, hosted by Juliet Bennett-Ryla, Rob Litters, Ben Berkeley, and Mark Dent is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. The Hustle Daily Show brings you a healthy dose of irreverent, offbeat, informative takes on business and tech news, like a recent episode on Hackers vs. Casinos, where the hosts talk about MGM Resorts and Caesars Entertainment and the devastating potential of cyber attacks. Listen to The Hustle Daily wherever you get your podcasts.

22:32Is now your time? Visit Thrivetimeshow.com to see testimonials of how Clay Clark's business coaching has helped over 2 ,000 entrepreneurs to dramatically increase profitability. It's month to month and less money than an average minimum wage employee. Schedule your free consultation today at Thrivetimeshow.com.