Advice Line with John Zimmer of Lyft

27:30How would it be designed different for a woman? Well, so we first started with the weighted backpack, and we focused on comfort. Most women don't like to be uncomfortable. Most people don't like to be uncomfortable. So when people think something is uncomfortable, they immediately assume something's wrong. So we looked at extra padding. We looked at how it's going to fit on the shoulder blades, the impact that it's going to have as you carry. We have a removable waist belt, adjustability, things that are easy for someone to do when they're out on the trail or on a walk. Soon discovered that women don't like to carry backpacks.

28:09So we iterated and found actually a commodity item, which was a weighted vest and ran a test selling weighted vests. And we had huge success. So then we designed our own weighted vest. and now are acquiring customers with weighted vests, but moving them into the backpacks. So our backpacks are actually starting to sell now. And revenue, can you give us a sense of what you've done? Yeah, in the first year we did 400K. That's awesome. Wow. And this is all direct-to-consumer? Direct-to-consumer bootstrapped from our website. Wow. That's amazing. Okay. Tell us what your question is before we dive in more.

28:46Yeah. So we're a bootstrap startup, as I mentioned, and we consistently are selling out of inventory due to demand, but we have limited capital. The current tariff policies are exacerbating the problem with the uncertainty around our capital needs and delivery delays due to related increased customs inspections activity. What strategies or funding options would you recommend so we can front our inventory investment needs reliably meet demand and grow sustainably? All right, John Zimmer, I'm going to bring in. You're looking very trim and fit now that you have not running the day-to-day, I must say.

29:26Thoughts, questions, comments for Terry? uh one um congrats uh that's a huge accomplishment in one year to have that type of revenue and and like in the last few weeks i just keep seeing people walking around the neighborhood with weighted vests it feels like it's a really good moment as guys said zone two is is something a lot of people are talking about so i think uh you're off to a fantastic start uh so have you looked into inventory financing or uh like line of credit we we have looked into it um and we have taken on a little bit of debt, but we really need to buy quite a bit of inventory.

30:04And at the moment, there aren't that many lines available for financing inventory that we have found. Got it. I have a friend in New York, and I don't know if we can follow up after, but I can provide maybe their contact information who has really specialized in finding people that are selling on Amazon or direct to consumer, because it does feel like in many cases, a business like yours has these financing needs and it was an unmet need. And he's done very well. I'm actually an investor in his credit fund, which does this kind of thing. And even John, I think like Shopify does this. And I mean, there's some big companies that have versions of this.

30:46Yeah, we took out debt from Shopify. Oh, great. So we took advantage of that for sure. Like I said, the demand is outpacing the inventory and we would have been further along in revenue, but we keep selling out. So we've sold out, I think, five times in the past year. We cannot just bring enough inventory in and that's the biggest issue. Well, I mean, this is a phenomenal problem to have, but understand you can go bigger if you solve it. I think, like I said, there are these solutions, sounds like you've already used Shopify. I think there are more parties out there I would keep searching. And then you can go to more of a friends and family approach where you look at the type of terms that Shopify was offering because things are going well, because you have momentum, you're starting to get the data on how much working capital you need to fulfill orders, what you predict demand will be in Q4.

31:44I think there should be other people that are excited to help support that. Definitely. I mean, that's a good idea to use the Shopify terms to kind of go out and then establish what people will get in return. Can I address the tariff question for a moment? Where are you making them now? Where are they made? We're importing from China and Pakistan. And I think, well, China right now I think is okay, right? But I wonder whether just to kind of hedge your bets, is it worth exploring like Mexico, for example? Or even, I don't even know if they can be, I'm sure there's some U.S. manufacturing, prices would be higher, costs would be higher, but is Mexico something worth exploring?

32:24I mean, definitely for our weighted backpacks, we kind of went down that road and looked into it. There just isn't the skill set there just yet to do what we need. And then also, as far as the weighted vests, it's the raw materials. The raw materials are the challenging part. they're tiny little iron pellets and i've even spoken with manufacturers in the u.s that manufacture like frying pans or anything like to see if they have remnants that we can kind of figure out how to turn those iron remnants into iron pellets and it's it's literally impossible are you able to do pre-orders where people pay in advance and and is that something you've tried i so i'm kind of have a moral dilemma with that i am by trade a digital marketer and i just feel like pre-orders.

33:13I don't know. It sets you up for failure down the line. It's my own personal issue, but what do you think about that? Should we take pre-orders? It's customer finance inventory, basically. I don't know. What do you think, John? I don't know. People want it. They're going to buy it. Yeah, I mean, I'd say it's not ideal for a customer, but it's better than spending whatever the cost is of the capital. And you can build fans. I love the way you talked about the community as rock stars and I think use it as one of your community building. Tell them your story. Bring them in on the journey and maybe they get a small discount.

33:50Think about how much you would be paying the bank to do that credit financing. Why don't we pass that to the customers? That's right, a small discount on a pre-order. Pre-order is going to be 5 % cheaper. I guess it's all about positioning and marketing when it comes down to it, right? How are you going to position and market it? Because as a digital marketer, when you take pre-orders, I feel like you need to be able to let them know when they're going to get the expectation of when they're going to get their product. I like that it makes you uncomfortable because it shows you care a lot about the customer.

34:22But yeah, I think it's an opportunity if you are honest and explain your story. I think it's a good one. I mean, I'm thinking on your website, demand is through the roof. We can't keep up with you. We will get these. We're getting these out the door as fast as possible. Sorry for the delay. but if you pre-order it, we'll give you 5 % discount to show our appreciation. I would order it. Yeah, definitely. I mean, we are coming out with a new product, and I've been kind of mulling over my head. Do we just put it up for pre-order as also a test to see whether or not there is really demand and interest for the new product?

34:57So you guys have kind of pushed me in that direction. All right, good. Good. John, any last thoughts? No. Like I said, I think it's very exciting. These are good problems to have, and congrats. Thank you. I will definitely want to connect with you to maybe see if your buddy who has that financing line... You're on LinkedIn probably, John, right? Yep. All right, hit him up. All right. All right, Terry Levy, Ruckster is the brand. Congrats. Thanks for calling in. Good luck. Thanks. All right. Are you doing any rucking? I haven't done it, but like I said, literally in the last week or two, I've seen a ton of people walking around the neighborhood with the weighted vest.

35:39And I was surprised. That zone two thing is very, it's crazy because you can still have a conversation and, but if you do it for an hour, it actually increases your VO2 max over, like it has a huge impact, like benefit. I've seen it. It's amazing. Sprints are great too, but if you can like keep in your zone two heart rate for an hour, it's like, and that, those weighted vests really help you get there. Well, this conversation might've put me over the edge. There you go. You're over the edge, dude. All right, we're going to take another quick break, but we'll be right back with another caller. Stay with us.

36:15I'm Guy Raz, and you're listening to The Advice Line right here on How I Built This Lab.

36:35Welcome back to the Advice Line on how I built this lab. I'm Guy Raz, and today I'm taking your calls with John Zimmer, co-founder of Lyft. John, you ready for our next call? Let's go. All right, let's bring in our last caller. Welcome to the Advice Line. You're on with John Zimmer, co-founder of Lyft. Tell us your name, where you're calling from, and just a line or two about your business, please. Hey, guys. What an honor. I really appreciate your time. My name is Kobe. I am the co-founder of Slow Coco, calling from the Bronx in New York City. We are a craft chocolate maker. We make chocolate that nourishes the emotions as much as the taste buds.

37:11For us, that means no more than one to four ingredients, starting always with single origin cacao sourced from folks we know and can visit. Wow. All right. Welcome to the show, Kobe. So it's slow cocoa, four ingredients, and you literally visit the places where they grow the cacao? That's right. My sister, Tovia, who's my co-founder, we were just visiting our farmers that we work with in Guatemala earlier this year. These are often indigenous communities that have been harvesting for generations. And to be able to share our chocolate with the folks that are making it possible on the ground is a real important part of the work we do.

37:51When did you start this business? We've been in business just over four and a half years. And what was the impetus? Were you in food or chocolate or confections or like what were you doing before? Oh, gosh. I wish I had some background in the industry. I joke that I'm a recovering real estate agent. And for me, it was an opportunity during the pandemic to continue in this hobby of making chocolate at home, following the curiosity of how is this food that I grew up with from such a young age, how is it made? And the opportunity to make it from scratch became addictive in many ways. When you say you made it from scratch at home, you were literally like roasting beans and grinding them?

38:32Or were you buying just chocolate bars and melting it down and putting it into molds? I bought a kilo of beans off of Amazon. It said single origin Peru. That was it. And I remember thinking to myself, this will be the best batch of chocolate I've ever tried. It was the first time I made it. I roast them exactly. You roast them in the oven? No, at first I did it in the oven following a special turning. Yes, eventually I got a small little countertop roaster. Go through the whole process. I have a studio apartment with a cat. So I covered my dresser at the foot of my bed with tin foil going through this process.

39:04I make it. Turns out I couldn't finish the bar. I couldn't share it with anyone. It was awful. So that started me on the journey of, all right, what went wrong? And how does Kraft chocolate actually deliver the flavor complexity that got me hooked? Wow. So clearly, eventually you figured out how to do this and you decided, I mean, it sounds like already back during the pandemic, you decided you want to start a business. I think I was one foot out the door with real estate in the sense that as soon as I discovered a space that was not gatekeeping in the way that I had learned to experience the capitalism that surrounds me, that was interested in elevating the industry for everyone's sake, that stood out to me.

39:48So I was learning to do it, not from classes. I was learning from folks who, in theory, should be my competitors. They were connecting me with the original farms that we were partnering with. They were there when I had specific questions. And to this day, there is definitely an eagerness and a drive within this industry to move us all forward. But the reasons are different. It's for the sake of the folks on the ground at Origins to improve the livelihood of folks who are making chocolate possible. for the sake of environmental conditions that are totally neglected and externalized in the cost of industrial chocolate products rather than for the sake of individual gain and profit.

40:23All right, I don't want to rain on the parade. I'm just saying that what if you don't care about that? You just want good chocolate. And again, I respect that right there. Just saying, what if you just want good chocolate? Yes, yeah. Like it's a business too. You got to make money. How is the business doing? We're doing great. Yeah, I appreciate that. We've been over more than doubling in size since we started. we only sell at farmers markets in the local tri-state area, New York, New Jersey. That's New York, New Jersey, and Connecticut? Although we haven't yet entered into Connecticut, yes. Okay.

40:53And we have our online store as well. For folks like you mentioned, and that's a majority of our customers, I would say, who are not necessarily interested to hear about this whole backstory. They just want to know, hey, does this taste good? To that, we love embracing that community because that's what this is all about. At the end of the day, it shouldn't matter where it's coming from. All right, Kobe, tell us your question before we dive in. My question is about work-life balance. And I don't think I need more strategies for delegation or time management. I've read, I listen to the podcasts, I have coaches and therapy and a support system.

41:28I have the strategies, but I also care so deeply about my team and Slow Coco that I don't always want to turn it off. I don't always want to step away. Even as sometimes my health or my relationships get sidelined in the process. So how do I practice personal sustainability when what I'm building feels like my life's work? All right. I'm glad you brought this question. Okay. John Zimmer, slow cocoa. Kobe sounds like he's dealing with some of the things that you dealt with when you were running Lyft. Yeah, totally. I can relate. But I think, you know, the way to frame it for yourself is maybe you can help more when you do take care of yourself.

42:13And I think that, I mean, that is true. If you are not taking care of yourself first, then all those people that you care about, I think, will be less cared for by you. And so that is step one. I remember one day my co-founder, Logan, and I were talking and I said, like, the thing that works so well for me is when I work out before work. but I just never, you know, the same kind of thing you feel like, I just want to put in a little more work or I just want to get right to the office or we have co-workers that are already in and I want to be there for them. And he was like, make it your priority.

42:46Make it the first thing you do. I don't want to see you until you've worked out. And it was helpful for me. It was almost like giving me permission, which I didn't need in practice, but I think I needed in words. And so I think you need to do the same thing. If you really do care about those other people, Well, then take care of yourself first. Yeah. Kobe, I'm curious, how many employees do you have right now, full-time employees? We have three full-time. That includes you? That includes myself, correct? Yep. And that will also include our first non-contractor full-time employee starting next month.

43:22And we have a total of 10, including the rest of our team. And that's people who are working the farmer's markets and things like that. Operations, yeah. So are you, when you say you are just grinding all the time, are you like roasting the chocolate beans? Are you, what do you, tell me a little bit about what that means. Yeah, this is where it gets tricky because we've really invested in the systems that allow me to not be making chocolate primarily anymore. So I'm involved in quality control, recipe development, and sales, which is what I love doing, being out at the farmer's market, connecting with folks.

43:54At the same time, it's only highlighted the problem even more so, which is the system might be there to allow me to step away. But part of me, maybe as an entrepreneur, believes I can have it all, that I can step away, that my relationships can be there to support me, even as I am always just thinking about it. This is just the air that I breathe. And I love that about me and about the business, that it's around me and always percolating. And I think those closest to me appreciate that too. But there is dissonance that I'm not always so self-aware about in practice. John, you know, this reminds me of something.

44:28I'm going to remind you of a conversation we had a few years ago. But Kobe, I mean, you have to believe that your business is better when you are better. Once you accept and understand that, then you can start to figure out the logistics, like the actual tactics that you have to do. And the reason why I say I alluded to something that a conversation John and I had years ago is because I think this is a simple hack that has really helped me, right? You have to decide that you are going to do the things you need to do every day to enable you to function well. And one of the things I made a decision to do was to brick my phone.

45:09And I know many years ago, John, you invested in the light phone, that phone, and I have one. It's a phone that's not really, it doesn't allow you to get distracted. it. It just makes calls and right. I didn't end up using it that much. But I brick my I have a device called a brick. It's literally you as a magnet on my fridge. And I swipe my phone over and it locks out everything on my phone, I can pick up to I think 20 apps. And really 20 apps is nothing if you think about it. It's like weather, or the maps app, like it's very it's so I can't check email, I can't do anything until I work out.

45:43And I, you know, have some sunshine. And then I start my day. And there are some, you know, maybe there's some days where people are like, where were you? Where are you? But I have to do it. And at the end of the day, I'm much better. I perform and operate much better. Right. Do you, is there, is there like a version of that, that you do, John? Yeah. Yeah. First step is, uh, take the phone out of your bedroom. If it's still there, like, I just have a rule, you know, I got an alarm clock. It's like a shocking, a shockingly obvious thing. Uh, but a lot of people I'm reminded because I did that many years ago, like when people say, yeah, you know, I first, I first, I got to get an alarm clock.

46:18And it's like, okay, that's step one, no cell phones in the, in the bedroom. Sleep is so, so critical. And it's tempting when it's there and you get an alert or whatever. So my, my path was alarm clock to brick and now a light phone three, their third device. I'm, I'm using as my, it's my only phone that has a SIM card. So, wow. You don't, you don't have a smartphone at all. I do have my iPhone that I took the SIM card out of because I was in Europe at the time and they have removable SIM cards, which was helpful. And I tether from the light phone to the iPhone if there's an app or function that I need.

46:54But I can easily just walk out of the house with only my light phone. Yeah, it's great. So I think that's just a simple hack. And I don't know if you have your phone in your room when you go to sleep or if it's the first thing you check. Is it the first thing you check in the morning? On some days it is only because I have to wake up so early for the farmer's markets on the weekend that that blue light actually can help knock me out of it, a little sleep inertia. But on those off days, I definitely try to sleep in and make sure there's time away from the screen before starting my day. kobe what do you want this business to be i mean i because there you can go in a number of different directions and there's no bad answer right like you can have an incredible lifestyle and and this can be a million dollar a year business and you could have a few employees and have an incredible you know you've got the farmers markets going you got your d2c and that could be a great or or do you want it to be a 10 or 15 or 50 million dollar business or more it's not the number so much or the size as the the impact that for me i know that's an easy word to throw around i i want to build something that eventually i can sell to its employees that i want the workers to own that i want to be able to exist for generations that that touches folks lives across continents all stakeholders in the entire value supply chain and and to me that that does entail some scale from studying other worker-owned co-ops there does need to be some scale element to that for sure.

48:19So I think that is definitely part of the drive that I'm testing the limits of. I have some thoughts on that, but I want to bring in John. I think scale really matters. You're very purpose-driven. Well, the bigger it is, the more purpose there is to go around. And so for me, we're looking at capitalism as if we apply it to the right things, and it looks like the way you're doing it can be very helpful to many people and give delight in the product, then I think, you know, depending on what's right for you, bigger is better in this case because of the purpose. Yeah, I am a big support of capitalism.

48:58This show supports capitalism because I think it is the least of the worst options out there. I think it does lift people out of power. There's a lot of good and bad, yes, but I think in general and balance, it's a better than worse system. Here's the thing I would say. Sounds like you want to build something with purpose, right? You're motivated by purpose. And you talked about one day maybe trying to sell this to your employees. Well, why don't you start now? I mean, you can build an ESOP, right? An employee ownership plan into your business now. You can start to create that mechanism now. You can start to give shares to your two employees now.

49:36And I mean, New Belgium did this at the beginning. New Belgium, you know, that makes fat tire beer and eventually became 100 % employee owned. Bob's Red Mill, you know, 100 % employee owned. Cliff Bar, I think it was 40 % employee owned. A lot of these brands built that into their company when they were just like, you know, a$500 ,000 company, when they were doing like peanuts compared to what they eventually became. So it seems to me like the issue isn't, I mean, it sounds like there's definitely some burnout, but when you're building something with purpose, then you also have other people who are stakeholders who are also owners who then take on some of those burdens and some of those stresses and pressures.

50:19That makes a lot of sense. Yeah. And I love those episodes that you've done with those brands you named. I would love to start it today. And you're right to ask why not. I am also wary of passing on risk prematurely to folks who have not necessarily consented or opted into that when they were looking for a steady job or something that they can feel good about and go home and turn off in ways that I haven't yet figured out for myself. I agree with Guy. Capitalism is the best system we have. Ownership is a great idea. You can start it now. If you're too worried about them taking on some of the stress you have, then they don't get to maybe ride in that upside.

50:57And so obviously they can't put in their own capital or a lot of their own capital. We did something at IPO. We recreated a system for drivers to get equity. I think it's a really, really important thing to look at based on your purpose and mission. That makes sense. Yeah, we do offer a profit share on a quarterly basis. So as especially for folks, it's a great start. So any profit from their sales, we deliver a percentage of that back to them on a quarterly basis. And that at least protects them from the downside while guaranteeing that our growth is tied in with their success as well. That's great.

51:34Well, the best thing you could do, again, Kobe, you run your business as you want to run. I think the best thing you could do is to make a profitable business that's ethical and a business that employs people and allows people to pay for college and for mortgages, like that is the best possible thing an entrepreneur can do. Right. How many, John, how many, I can't even imagine how many college tuitions and mortgages were paid because of Lyft. Yeah, there were, I think it was when I was leaving, like 3 % of the U.S. workforce had earned on Lyft. And when I was having those hard days, just reading those stories of that kind of thing.

52:11Someone being able to pay for college is super motivating. So yeah, let that be your fuel. Let it be your fuel. Kobe Goodwin, the brand is called Slow Coco. Thanks for calling in, man. Good luck. Thank you both. This is huge, huge insights. I appreciate it. Nice to meet you. So John, I have asked every founder who comes on the show a version of the same question. We've talked a little bit about this already, but I'm curious like now, when you look back on where you were, right? When you zim ride into starting lift and, and if you, if you knew what you know now, right, which would make the journey less meaningful probably, but if you did and you go back in time and say, Hey, John, I know this stuff.

52:52I'm going to tell you something that's going to help you. Is there something you would tell him back then? Yeah. Just, you know, I don't live with a lot of regrets. So maybe it's an entrepreneur thing. I just like to keep going and learning and, but, but like enjoy, it's so cliche, but enjoy the journey. I mean, all those hard times, and they were very hard, have made me a better entrepreneur, a better parent, a better husband, and a more empathetic human. And so there's value in it all. One of my friends early on said something like that to me. He said, don't forget that this is not just about whatever you define as success.

53:31This is about learning. And it really, I would go back to that, even though it's such a simple thing. it was, I, it helped. Yeah. Yeah, sure. John, thanks so much for coming back on the show, man. Thank you. It's always fun. That's John Zimmer, co-founder of Lyft. And by the way, if you haven't heard the Lyft episode, go back and check it out. It's an awesome story. And here's one of my favorite moments from that episode. One of the kind of funny things we had to figure out was how to quickly market to the college campus. And so one of our early purchases was a frog and beaver costume that we put on.

54:08I went to Cornell. I was actually going to Cornell on a recruiting trip for Lehman. And I was standing on the quad in this ridiculous costume handing out cards about this carpooling service. Is this a frog costume or the beaver costume? I was the beaver. You were the beaver, okay. And at that next day at the Lehman recruiting event, a girl came up to me and said, did I see you in a beaver costume yesterday? Hey, thanks so much for listening to the show this week. And by the way, please make sure to check out my newsletter. You can sign up for it for free at guyroz.com or on Substack. And of course, if you are working on a business and you'd like to be on this show, send us a one minute message that tells us a little bit about your business and the questions or issues that you're currently facing, because we would love to try and help you solve them.

55:00You can send us a voice memo at hibtid.wondery.com or call us at 1-800-433-1298. Leave a message there and make sure to tell us how to reach you, and we'll put all of this information in the podcast description as well. This episode was produced by Chris Massini with music composed by Ramtin Erablui. It was edited by Andrea Bruce. Our audio engineer was James Willits. Our production staff also includes Alex Chung, Catherine Seifer, Casey Herman, Carrie Thompson, Noor Gill, Ramel Wood, Sam Paulson, Neva Grant, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.

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