Advice Line with Joe Gebbia of Airbnb

26:12What kind of beers are you making? So we're a, what I like to call a Latino forward brand. So I like to tell the entire world that this is owned and operated by a Mexican American, because there's not that many of us in the craft beer industry or in the beer industry rather. But we make light lagers, Mexican-style lager. Our flagship beer is called Bidi Bidi Blonde Blonde, which is a blonde ale. So, you know, in general, it's your typical beer styles that tend to do well in the market. Awesome. And before we dig in a little bit more, tell us what your question is for us. So, obviously, I'm tiny, but I've been having some success in my local market.

26:56I have decent demand. This is in the LA, in like LA area? Yeah, in Los Angeles County, a little bit of Orange County as well. But I've been struggling with scaling. I've had some great opportunities to land bigger retailers, but I haven't had the proper capital to scale and really take advantage of these opportunities that have been coming my way. When I launched this brand, the seed money I gathered from selling off old DJ equipment I launched a small Indiegogo crowdfund campaign and off I went. And my issue is I don't have any established credit. I don't have bad credit. I don't have any established credit, so I can't get a loan.

27:41I've been applying what feels like for over a hundred grants. Back in 2022, I managed to land one, which was amazing. But other than that, it's bootstrapped, super lean, super scrappy, and I need help or ideas in that area. Like what are my options for finding funding? This is an interesting challenge. Okay, before we get to tackling this question about cash, right? Tell me how you got, because you mentioned that you sold DJ equipment to finance this business. So I'm assuming you were at one point making some money as a DJ. How did you get into brewing? Like, how did this start? So I have like a solid 20 years of being in the music industry.

28:26And back in about 2012, 13-ish, I was managing local bands here in the city of Norwalk. And I noticed that there was no local venue to book these live acts. So I thought, hey, maybe I'm the one to open up a venue and book local live entertainment. That sort of led to me thinking that it could be a bar and grill serving California craft beer. Fast forward to 2014. My wife was giving birth to our daughter. There was some issues there at birth, and we found ourselves 45 days at the hospital. So I needed something to do. Picked up some books. One of the books was Brewing Up a Business by Sam Calagione.

29:08Yeah, yeah. Dogfish Head. It was on the show. Yeah. That's right. I love that episode. Anyhow, that book really inspired me to think about potentially building something more than a bar and grill. And in 2015, I co-founded a homebrew club called the SoCal Cerveceros, which became the largest Latino-based homebrew club in the country. Nice. So as I'm diving deeper into the homebrew hobby, I'm starting to realize there's this huge void in the industry. There's not very many Latinos on the ownership side. So I saw there was like a potential opportunity there for a brand to come out and really speak to the Latino consumer.

29:55And during all this time, I'm managing and I'm DJing on the side. um so when the pandemic hit any dj work that i had happening was completely gone so i just figured hey here's an opportunity i might as well go after it started selling off my equipment microphones mixing boards and speakers i made a few thousand bucks uh launched a indiegogo campaign and i think i i got somewhere around 20 grand and launched this brand amazing i love that story joe All right. Ray is at a crossroads. There's demand, but he's got to raise money. He's got to raise capital in order to try to scale this thing. But he hasn't had any luck with loans and he's trying to figure out what to do.

30:43I have some thoughts. Where should he start? Hey, Ray. Great to be with you today. My question is, what percent is selling for tap to bars and what percent is retail and cans to consumers? Well, if I'm selling a keg to a bar, they're purchasing that for me for about$180. It's probably costing me between$120 and$130 a keg, depending on the style. At retail, it's cans only. And I think my margin there is somewhere between 40 % and 60%. Right, right. Right. Yeah. I just want to get a sense of, you think there's more upside in the future on the B2B side, or is this more of like a get to retail stores and expand there?

31:34Is that the real opportunity? I feel the real opportunity is to be in direct-to-consumer. And long-term, that has been my plan. I really want to open up Norwalk Brewhouse, the physical location. And if we're selling beer direct-to-consumer over our bar, then our margins are the biggest there. Um, so the reason why I chose to go the contract brewing route was because it was lower risk, lower investment. Um, but it's a really tricky time right now. Uh, when the pandemic hit, everybody went from, um, on-premise to off-premise. So retail sales were through the roof. Yeah. Now a lot of that has, has shifted, um, and on-premise or going after draft accounts, it's super hard.

32:17It's a challenge because, you know, I've had experiences where I've managed to land accounts and then the bigger distributor will come in and remove my keg from the tap. And with what you're doing, you got to work with a big distributor, otherwise you can get swallowed. And just out of curiosity, are you in or have you approached like some of the retailers like in California, like BevMo or Total Wine or any of those places? I have not. And it's mainly because I'm confident that I could land those accounts. But if I do land those accounts, and I'm going to have a huge purchase order that's going to take significant capital up front.

32:51that I don't have. So I've been slow to go that route. Well, you know, I think, Ray, I look at you now as you're a food and beverage entrepreneur. And, you know, that's going to attract a certain type of investor that's, you know, not a tech investor, it's not Silicon Valley, but there are investors for food and beverage, obviously. So I feel like that's the space that I would go network in and explore and really try to surface some names of like, who's out there, who's, you know, even local to you, kind of regionally based, or expand beyond that. And I don't know, I would start reaching out to people.

33:28I would start to find connections to food and beverage investors, probably at the angel level, but maybe at the VC scale. And I would start to have conversations with them to just put your idea in front of them and start to make pitches. Right. So what you're saying is find somebody who's in food and bev, maybe another founder like somebody who created the Obama-Os, somebody like that? Somebody like that, maybe, yes. Somebody with definitely more experience than the guys who created the Obama-Os. Touche, Joe. I think that's really good advice. You know, Ray, we did an episode you may have heard not too long ago about athletic brewing, which is a non-alcoholic beer, and nobody wanted to work with him.

34:11He couldn't even find a brewmaster to work with him because it's a non-alcoholic beer. and he went around to every single person he knew teachers friends family friends anybody asked anybody to invest in the brand you're now working on a product i mean look let's be honest mexican beer is having a moment um and so there seems to me like there's an opportunity here with what you're with what you're doing you know you're doing a mexican style beers lagers ipas i don't even know if anyone's doing Mexican style IPAs in the U.S., right? Technically, that's not a thing, like a style. Yeah. But we can make it a thing.

34:49Right. Exactly. Yeah. Like my flagship, Bidi Bidi Blonde Blonde. And for all the Latinos listening, they'll understand that reference, Bidi Bidi Blonde Blonde. We market it as a Mexican-American blonde ale. Technically, that's not an actual style. Yeah. But I'm saying, hey, I'm a Mexican-American and this is our beer. There you go. This is our beer. You're making the style, right? You're making the style. So in terms of fundraising, I mean, look, the reality is everybody has a network, even if you think you don't. And it's, you know, the person that you see at Starbucks or, you know, a friend of a friend or someone's parent or someone at your, like, church or community center, somebody.

35:37There are people that you can talk to and find out if they'd be willing to put in a small investment. Because I get it. It's hard to ask people for help. But here's a trick I use. If you think of what you're doing, which it is, as a mission, it's not about Ray getting rich or Ray serving himself or his interests. It's about the mission that you are pursuing, which is building this brand that you believe in, that you believe a lot of other people will believe in and get value from. And just putting yourself in that mindset might actually help a little bit when you're asking people for help. I mean, it's the hardest thing about fundraising.

36:15It's asking. Most people have a hard time asking for money. But if you can get past that and just be prepared to hear 99 no's for every yes, it's eventually going to succeed. Yeah, I think you'll eventually find that person. And I don't have the sense that, Ray, you have an issue with asking people for help. You're on this call with us right now as an example. I'm definitely getting better at it. I do struggle with asking for money, to be quite honest. But I know it's definitely necessary, and it's something that I just got to do. Well, Ray, this is your call to adventure here, because if you're going to be an entrepreneur in this space, you got to be comfortable asking for money.

37:02And look, you're going to get a lot of no's. And I will share an equation with you, actually. This is one I learned back at school. I snuck into an entrepreneurship weekend at Brown University. This guy was giving a presentation on failure and he put up this equation, SW squared plus WC equals MO. And he broke it down. And he said, when you're selling a product, you're asking for money in this case, some will want to give you money. Some won't SW squared plus WC who cares equals MO move on. You just got to keep going, man. Like, and I think you just got to get out there and start cold emailing people, showing up at events.

37:46This is where the hustle, you got to get into hustle mode to cross the bridge between where you are now and where you want to get to with regards to fundraising. That's good. Thank you for that. Yeah, that's helpful. The brand is called Norwalk Brewhouse. Ray, Ricky, Rivera. Good luck, man. We're rooting for you. Cheering you on, man. Guy and Joe, I appreciate it. Thank you so much. Cheers, Ray. Thanks. Thanks for calling in. I gotta say, looking through their website, he's got, he clearly has authorship. You know, he knows how to create something distinctive. These cans are really nice. He's got the lotterias from the cards from that, you know, the Mexican game lotteria.

38:23It's cool. There's authenticity to it, which is working in his favor. I feel like he's not too far away from, you know, reaching, like, you know, there's cult brand status for him out there somewhere. I think so too. If he can just get to the right investor. Yeah, I think so too. And that's how it starts, right? For sure. All right, we're going to take another quick break, but we'll be right back with another caller. Stay with us. I'm Guy Raz, and you're listening to The Advice Line right here on How I Built This Lab.

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41:31Welcome back to the Advice Line on How I Built This Lab. I'm Guy Raz, and today I'm taking calls with Airbnb co-founder Joe Jebbia. So, Joe, let's bring in our next caller. Hello, welcome. Please tell us your name, where you're calling from, and a little bit about your business. Hello, Guy Joe, JL Thorpe, founder and CEO of Gameday Social Apparel. Thank you so much for having me on the show. I'm excited to be here. The company's based in Sioux Falls, South Dakota. We launched in 2021 to produce top quality, trend forward sports apparel exclusively for women. And to date, we're featured in around 2000 retailers across North America.

42:10Wow. And these are just to be clear, these are sports for college, professional, both? Our licenses are with universities currently. Universities. Okay. So you have licenses with universities and you make sports apparel primarily for women. So like if it's Michigan, it would be like Michigan sweatshirts for design for women. Yes. Yes, precisely. That was probably a massively underserved market. Tell me how you started this business. How'd the idea come about? Yeah, well, no, big time. So my background is small brick and mortar retail. I really cut my teeth in the fashion industry, owning a women's boutique.

42:48And through that, I started producing a few graphic tees for a local university. And that really came about, there just was never anything that my friends and I wanted to wear to games. What was the university, by the way? South Dakota State. Nice. Okay. So you started making them just for you and your friends, like cool shirts and sweatshirts that look better because a lot of them are really kind of designed for the male fan, right? Yes. You understand my industry perfectly, it sounds like. So I owned these two women's stores in South Dakota. And so I started producing shirts to sell through the stores.

43:23And I think pretty quickly, I recognized there just was a much bigger opportunity than what we could sell to South Dakota State. Amazing. And tell us, before we ask you more questions, what's your question for us today? Yeah, absolutely. So like I said, we're about four years in and we've experienced a pretty incredible sustained growth rate. And so as we get the right people and the processes in place to just create stability and to continue to grow, I keep looking at the next stage and I just know that that scrappy mentality that got us from zero to here is not going to get us from zero to 50 million.

44:04And so as we consider growth, I would just love to have a conversation with both of you on how you recommend that we assess the opportunities that come our way. Before I bring in Joe, just can you briefly give me a sense of what is your revenue right now? Around$10 million. $10 million. You must be the biggest small business we've had on the advice line. That's amazing. That's incredible. Congratulations. I mean, most of the businesses are doing, you know,$10 ,000 to$50 ,000 a year. Okay, Joe, I want to bring you in. First of all, amazing story. It really is. It really is. Well, I still have plenty, plenty to learn.

44:42That's why I'm here. So, JL, like when you think about what, I'm always curious when people think about their company and their brand, what do you think is the core idea behind your brand? I mean, really Guy kind of summarized it. It's product built exclusively for women. And so, I mean, what I love about you and your background and what you built and the disruptive nature of it is that the whole idea was design, a lot of where that started. And so, to me, it's all about design and quality. And as we scale, that obviously gets more difficult to preserve that design and quality. But I think that's, I mean, that's our secret sauce is just creating products that are so unique and distinctive that they stand out.

45:27That all makes sense. I want to push a little bit further, though. What is it about game day social that a woman buys from you and not somebody else who also makes for women, women's wear? Well, I think one area that we spend a lot of time on is the fit and the silhouette. And I think that's really what it comes down to for women is when you pick up a piece, it's all about how it lays, how it feels, how it drapes. And a lot of the sports apparel out there is really men's garments with a little bit different spin. So when you talk to your customers, I'd be curious, like, what are they saying they feel like?

46:07What does wearing one of your garments do for them emotionally? Like, what have they said to you over the years? Yeah, no, I love that question. We say that, so our tagline is, we're for the social fan. And the reason that I picked that is because I personally am not, I'm actually not a sports fan, which is kind of funny that I wound up in this industry. but honestly that's kind of really part of what makes us special is that I wanted to be able to go to games and feel like part of that environment part of that social experience but I don't know anything about the team I'm not paying attention necessarily to what's always happening on the field and so I think really what we're able to bring is this just sense of of belonging in that community to a female fan but also just in an elevated way where she's representing her own personal aesthetic.

46:57I feel like I'm looking at your website here and looking at all these different universities and the designs are basically, my assumption was you would just have these cookie cutter designs with the different school names. Every single school has different designs, which is pretty remarkable. Thank you. And they're really cool. And are they sold? Are you selling, what's your main channel? Are you mainly wholesale or D2C? We're very predominantly wholesale. That was the strategy that we started off with. We'd love to grow the D2C side, but that's a slower build. And you are, so you're sold in like shops on campus or around the campus?

47:36Campus stores. We sell to a lot of boutiques, small mom and pop shops. That's my roots. So I'm faithful to that customer base, but we also work with a lot of national retailers as well. And have you taken on any investment yet? No, I've been able to get to this point without diluting the equity. So the goal is to keep it that way. So you own 100 % of the business? That's correct. Wow. So now, all right, so you're talking about where to go next, right? Because obviously you want to grow. Joe, what do you think about, I mean, there's a lot of different directions you could take this in. Like, do you seek out investors, right, at this point?

48:15Do you slow down growth? Do you speed it up? We're about to have an episode where I interviewed Michael Rubin, founder of Fanatics, right? Biggest sports apparel brand probably in the world. And you're going to be a lot for you to learn from that episode. But, you know, multi-billion dollar business. Joe, when you think about about growth at this stage, eight million dollar brand, really good category. College sports. It just seems like there's endless growth. What do you think? What should she be thinking about? Well, JL, you've already done the thing that I would have advised, which is to bootstrap as long as you can.

48:51That was one of the best things that we ever did at Airbnb is that we built up value scraping by without giving out too much of the company too early. And so as we went into fundraising, as we knew it was time to scale, as we proved out our model on our own dime effectively, it allowed us to go into investor conversations having a real seat at the table having a full hand of cards to to work with uh as we got into discussions with them and it seems like you may be at that time you know you've got years behind you you've got clear you know success you've got you know real revenue and i'll give you one other piece of advice which is the best time to go raise money is when you don't need it.

49:35And so if you're in a position where you've got, you know, ramen profitability, where you're able to cover your expenses and your costs, and it's effectively unlimited runway, you have a unique advantage to go out to seek investment at this point. And so I think it's really where I would start is what, where do you want to end up? Like, what is your biggest dream for where you could take this company? And I'd work backwards from that. Yeah. And honestly, that's, I mean, I would love to hear more from you about that process of, like you said, when you got to that point where you had the hand of cards and you had the seat at the table of also just looking at what, what, what did that, what, what were you guys looking for in terms of that investment?

50:19What did that, how did you weigh those opportunities? What did that kind of look like? Well, we needed a seed round so that we could hire people. It was still just the three of us working out of our three bedroom apartment. And so we went out to, to meet a couple of investors and sure enough, one of the first two that we met with, uh, want to take a big bite of the apple. And, you know, the fact that like, we didn't necessarily have to take their money. It's not like it was sink or swim. Our life didn't depend on it. You know, it gave us some leverage in those conversations. And it sounds like you may be in a similar position.

50:53Yeah, no, that's extremely, extremely helpful. You know, the other thing that I was thinking about when I was just thinking about you and your story and that, like, diversification and looking at new revenue streams or categories, I would love to hear you talk about your decision as an organization to add experiences. What was the decision-making process for, let's add experiences to the platform and not vehicles or office spaces or something else, if you really need to share that? The experiences was born out of us listening to our customer base and also our own vision for wanting to offer more than just a place to stay.

51:32A trip is many things. The stay is just one of a dozen things that people need in order to have a great vacation. What are all the things that we could do through our lens of providing local authentic accommodations or local authentic experiences? how could we extend our platform to allow hosts to offer those experiences when you travel? Really just answering the question that people have. Okay, you helped me get here. Now, what can I do? And let's answer that in a very on-brand way by allowing our hosts to host. Yeah. That's awesome. I think that makes a lot of sense. Jail, I think, and sort of, you know, doubling down on Joe's point here.

52:13I mean, you know, you have, how many employees do you have now? We're a team of about 20. 20 people. That's awesome. Okay. So 20 people. And I'm assuming you are, are you profitable? Yes. Yes. Okay. But probably your margins are not, they're probably still not super high. Not quite yet. Yeah, correct. Yeah. Apparel is tough. It's tough business. But with, you know, bringing a good strategic investor, and you're going to want to think really carefully about who that is, right? You're going want somebody who has experience in apparel, if you bring somebody on or experience in licensing and design, that gives you the opportunity to really scale up the designs, right?

52:55Because I'm sure that's a challenge, right? You probably don't have enough designers. You know, that's actually something that we've really managed to create processes around outsourcing to be able to scale that out, which I am proud of because, again, that's so critical to our brand is the design. I would say, though, the piece to that that we need to scale out that that's just taking time is to diversify our manufacturing base. We really need more manufacturers and that's a long process. And so, yeah, I would say those would definitely be would be important pieces. Yeah. And of course, given the political winds of change, you may have to think about where you get those manufactured, of course, if there's issues around tariffs and things like that.

53:41So that could pose a challenge. But there's obviously solutions to that as well. Yes, we've been talking a lot about that. And yes, a lot of our manufacturing right now is happening in China, but we've added a great partner in India. But again, that's a lift. I mean, that just takes time and cash. And so, yeah, no, this is super helpful. Cool. J.L. Thorpe, the brand is called Game Day Social. Congrats. It looks like you're doing a lot of things right. So good luck. Keep it going. Thank you so much. This was such a treat. Guy, my 10-year-old son, a budding entrepreneur, and I love to listen to your show together.

54:17You're just so exceptional at what you do. And Joe, really enjoy your perspective and just love that you took the time to do the show. So, so good to meet both of you. Take care. Thanks, Jayle. Thanks. Awesome. I love that business. I love that idea. There's a product. It's serving a lot of people, right? I mean, sports apparel, college sports apparel. It's such a massive business. And it seems like it just never stops growing. No, there's always more alums graduating from schools that want to stay connected. And people spend so much money on. We had a whole episode on a hotel company that you may know of, the graduate hotels.

54:56It was really started out in college towns. Ben Weprin just started a hotel. He's like, hey, parents, alumni, people kind of visit. Why don't we make a hotel in the college town, but decorate it with the college colors and themes and sports heroes? And now there's like 50 hotels. They sold it to Hilton. So people love college stuff. They're so committed to it. Well, there's probably more out there besides college, WNBA and others, you know? Exactly. Joe, before I let you go, it's a version of a question I ask everybody who comes on to help me out here, which is you've got Samara and you've learned.

55:32I mean, I'm sure because you learned so much with your experience at Airbnb, you probably went into your, you know, into this business with obviously a lot of experience and perspective. Probably still made mistakes. Everybody does, you know. But if there was something that you could have told yourself back in 2008, you know, when you were building Airbnb that might have made things a little easier or would have given you some perspective. Is there something that you can think of that would have been helpful? Well, I'm going to answer that by saying the piece of advice I give myself is to have more mentors.

56:14Because starting something as exciting as it is and sounds, it's also at times extremely lonely. Especially if you're doing it for the first time. And especially if you aren't exactly sure what you're doing. And I eventually found mentors, of course, along the way. I just wish I had found them earlier. I feel like once I did find them, they really helped me avoid some pitfalls and some landmines on the road of entrepreneurship. And I'm like, man, I wish somebody told me earlier on, take the time, go reach out to people, and find some folks who have seen the movie play before and can provide advice and perspective so that you're not on your own.

57:01That's good advice. Joe Jebbia, co-founder of Airbnb, thanks so much for coming on. Guy, it was a pleasure. And by the way, if you haven't heard Joe's original How I Built This episode, you've got to go back and take a listen. We'll link to it in the podcast episode description. And here's one of my favorite moments from that interview. We ended up going from zero to 800 homes in a matter of four weeks. And I have to tell you, I thought that this was it. Like this was our rocket ship to the moon. You thought we made it. We're here. We got it. Right. If you build it, they will come and look what's happening.

57:37And so we get introduced to 20 investors in Silicon Valley. 10 of them replied to our email. Five of them made us for coffee. Zero invested in us.

58:16hibt at id.wondery.com or call us at 1-800-433-1298. You can leave a message there and make sure to tell us how to reach you. And by the way, we'll put all of this in the podcast description as well. This episode was produced by Carla Estevez with music composed by Ramtin Arablui. It was edited by John Isabella. Our audio engineer was Jimmy Keighley. Our production staff also includes Alex Chung, Chris Messini, Elaine Coates, J.C. Howard, Devin Schwartz, Catherine Cipher, Carrie Thompson, Neva Grant, and Sam Paulson. I'm Guy Raz, and you've been listening to The Advice Line on How I Built This Lab.

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