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Our current CFO, Jocelyn, we gave her a presentation to do.
And her presentation started with here's all the ways.
E-commerce is terrible and we should not be going into it.
You have to collect sales tax on like for every state.
You have to deal with returns.
You have to deal with products that are being discontinued.
And we were so naive about how hard it was It was actually going to be to do the logistics side of this business.
Welcome to How I Built This a show about innovators entrepreneurs, idealists and the stories behind the movements they built.
I'm Guy Raz and on the show today how a bad experience in a big box baby store led Natalie Gordon to build an alternative, a website that grew into one of the most popular registries in the country BabyList.
Babies need a lot of stuff.
Changing tables, changing pads, car seats, cribs, strollers, bouncers.
It's endless.
But what do new parents actually need?
Which products are worth it?
And where do you even start?
Well, back in 2010, Natalie Gordon was asking those very same questions.
She was pregnant with her first child, living in Vancouver, and working as a software engineer.
And like a lot of expecting parents, she didn't have much time or money to waste.
The baby stores were overwhelming.
Too many brands, too many shelves, and baby registries?
They only worked with specific retailers, so you couldn't mix and match from different stores.
So Natalie decided to fix it.
She quit her job and started building the kind of registry she wanted, one that included everything from traditional gifts to practical help like a diaper service or a friend walking your dog while you adjust to life with a newborn.
And what made BabyList different was that Natalie was building it while living it.
She was a new mom, writing every line of code during nap times and solving problems for herself and other parents at the same time.
Since its launch, BabyList has grown into one of the most popular baby registries in the US, with its own retail shop, product reviews and educational content.
Nearly 100 million gifts have been given through the site, and annual sales are estimated at over half a billion dollars.
As for Natalie, she grew up in Ontario in Canada.
She was a pretty good student, and in college, she studied math and computer science.
In the early 2000s, she landed her first job at Amazon just as the company was at a critical turning point.
It was a really great time to be at Amazon.
I really was part of the founding team for Amazon Fresh.
Hmm.
Which was so hard.
It was like the normal Amazon order had two items and Amazon Fresh had 100 items because it was groceries.
There were just all of these problems to solve.
Yeah.
And I mean, you were there from 2004, 2008.
And people like think of Amazon as, like you know, this 800 pound gorilla.
That's been like that since the day it started.
But at that time, I mean, yes, Amazon was already certainly a significant a big company.
But it was still it wasn't as mainstream as it is now, like in 2004, five, six, like, not everybody.
In fact, probably most people were still not ordering lots of stuff from Amazon.
If they order stuff, it was books.
It was books.
They were just going into music.
A lot of the cultural elements of like what make Amazon were there, but they were absolutely the upstart.
Like truthfully, getting a job at Microsoft was much more prestigious than getting a job at Amazon at that time in Seattle.
Yeah.
Wow.
So tell me, I mean, you have this great job.
You're getting equity and stock options, you know, like.
What happens?
Four years in, are you burned out?
What's going on?
I made myself a promise when I took the job because I had really gone from high school to college.
I hadn't taken any summers off.
I had been in this internship program that I really wanted to see the world.
I really, really wanted to travel.
And so that was really what I was, why I left.
I was really excited about traveling in Latin America, learning Spanish.
And so, with my boyfriend at the time, in this trip that it was about a year and a half, we ended up living in three places in Havana Cuba Medellin Colombia, and then Oaxaca, Mexico.
And how long did you guys travel?
It was, the trip was about a year and a half.
Wow.
And then at the very end of it, we got married.
Okay, I got it.
Okay.
So while you're on this trip, I guess you get an idea for, because you have to do something, right?
You can't, I mean you quit, but clearly in the back of your mind and you must be thinking hey I'm, you know, gonna do something when I'm done with it.
And so what did you come up with?
Not at all.
I don't think I ever thought of myself as an entrepreneur.
The first place we were was Havana, Cuba.
And at that time, there was very limited access to the internet there.
And so it was actually this total digital detox where...
I was learning Spanish all day, like walking to the University of Havana, really exploring that city, making some friends.
And I started feeling really excited that I wanted to build something.
And my actual framing for it was I went to college for four years.
I worked at Amazon for four years.
And like, I don't actually know how to build an app or a website from end to end.
Hmm.
Like where you're setting up the web server and the database and choosing the language.
And so that was, it felt like a gap.
It felt like something that I had some imposter syndrome over.
And so that was the thing I was excited to do.
So, yeah, tell me more about what you started to think about.
Yeah, so I had a lot of ideas, but the thing that was really true in that trip was I was getting the most benefit from meeting Spanish speakers and actually practicing my Spanish.
And there were so many people who really wanted to talk to me because they themselves were learning English.
And they were so motivated to learn English.
And so it would be called an intercambio, where you would speak Spanish for 20 minutes.
They would kind of correct some of your pronunciation.
And then you would talk in English for 20 minutes.
And so it was like, oh, like...
There's all these people who want to do this.
And so like that was the vision.
The vision was a place you could go online.
You could click a button and actually have this real practice with a native speaker, specifically for Spanish and English.
Got it.
OK.
And what was it?
What did you call it?
It was called Lengua Hero.
OK.
And so when this trip ended, did you did you guys go back to Seattle?
Did you go back to Canada to start this?
I started it on the trip.
So me and my partner, August, it's something that we started together.
You started Coda website, basically.
Coda website.
And then I remember we launched it once we lived in Oaxaca.
And then it was live for a number of months.
So it was actually like one of the main things we did during that entire trip.
And you would basically recruit teachers and I guess pay them.
I mean, I know the model today, but was that the model then?
Yeah.
In this case, it was all about the peer to peer learning.
And so it was go search who's online right now, see what their interests are and click a button and see if they want to talk to you.
And you guys, and then it would cost.
There would be like a fee, and then you guys would get a part of that fee or all that fee, something like that.
Well, the biggest problem with this is there was no business model.
And so like maybe that would make sense.
But in this case, like it never really was set up to make money.
In its top month, it only ever made $40.
And so to me, I even feel bad about calling it a startup.
Like it felt like a project that I was really excited to do.
But this project really consumed you, right?
Like this became something that you really wanted to turn into something with traction.
How were people receiving it?
I mean, were you I mean, first of all, how are you getting the word out?
I think we partnered with podcasts.
There were language learning communities and groups on Facebook.
It was pretty grassroots.
And it had thousands of users.
And there were some real power users who absolutely loved it.
Okay.
So you're working on this.
And how are you earning money at the time?
So I had saved up so much money from Amazon.
So this entire time, it was really living off of savings.
And living in Latin America was cheaper than living in Seattle.
Yeah, fair enough.
So, all right.
So you are working on this project.
Meantime, I think around 2010 or maybe earlier, you've become pregnant.
And you're going to have a baby, right?
And you and August at this point are married.
Yeah, we got married in early 2010 at the very tail end of this trip.
And then we knew we wanted to move back somewhere, get back into life, and chose to move back to Canada.
Yeah.
We were living in Vancouver, which was a new city to me.
I was doing contract work, so I was actually working again.
I was consulting for a startup down in the Bay Area.
And yeah, I was pregnant with my first son.
It was like a pretty crappy time.
Like we lived in a really... crappy house that was like on a slant.
The day after I found out I was pregnant and when I started to feel nauseous I found a bed bug like and then had to do all of the fumigation.
I didn't really feel like I had friends and I felt like life was really changing and I really Hated the work I was doing, this consulting work.
It was that time period.
I'm sure you remember where on Facebook, everyone was playing Farmville.
Facebook had opened up their API.
So I was writing code every day that spammed Facebook for other people.
Yeah, for like for a for another company that and no one was even really using their product.
They wanted people to use their product.
And so the solution was to make it go viral by spamming Facebook.
And so that's what I was doing all day.
So miserable, just kind of like you hate you were hating this.
Meantime, you got you were pregnant.
And I guess – I mean, and this is the thing.
Like, and this happens to a lot of people.
When you start to have a family, like all of a sudden, a whole world opens up to you that you hadn't seen before.
You start to see things.
I remember this when my first son was now 16 when he was born.
All of a sudden, just the world looks different.
First of all, you start to notice babies and strollers and –
You know, playgrounds.
I never even knew there were playgrounds in my neighborhood.
I remember, you know 17, 18 years ago we were living and I was like oh, there are playgrounds everywhere.
Right.
You're and you're in this world where you're going to become a parent.
Not happy with what you're doing, having these skills.
Working on this website or this project, the Spanish English project.
That's kind of not going anywhere.
And I guess you start to think about other possibilities.
Tell me about what's going on in your in your head at that time.
So a couple of things lined up.
One of them was I read the book, The Lean Startup by Eric Ries.
Yep.
I've never talked to him, but it's so influential in my life because I read the book and it's like it was titled Natalie, here's everything you did wrong with Lengua Hero.
Here's your manual for life.
Massively influential book.
He really describes also a software engineer's mindset and how they get it wrong.
Where the solution is to build new features, where he really is introducing this new way to build something.
And I was like, I want another at that.
Like I see everything I did that really is why Lengua Hero didn't work.
I would love to do this all again and really use this as my Bible and like the way I would build something.
Okay.
And I think at this point, you and August actually decide to shut Languero down.
Like it's kind of run its course and it comes to an end, right?
And then meanwhile, you're in Vancouver and you're doing this coding job, right?
Yeah, so I was now really getting prepared for having a baby.
And I was going to have a baby shower.
I had a best friend.
My sister-in-law both lived in Vancouver.
They were like, you need to create a baby registry.
And so the way you do that is you would walk into Babies R Us and they would give you a scan gun and you'd walk around.
And it was this big box experience.
I walked in.
It was immediately overwhelming.
Just thousands of things.
Thousands of things.
So they would give you a scanner.
There you go.
I never did that.
I don't think my wife did either.
But you'd go in with a scanner gun.
Yeah, they'd give you a scanner gun.
And you'd just scan the UPC or whatever, the code, right, the barcode on the back.
Yeah.
And it would be like I'm in the bottle section.
There's hundreds of products here.
There's hundreds of nipples and bottles.
Like which bottle should I get?
You needed to hire a consultant to come with you to tell you what to do.
Like an hourly paid consultant.
And I think money was really tight for us.
I was doing this consulting work.
August was in school.
And I felt this real pressure.
I wanted to really make sure we got the stuff we needed.
I didn't want to make mistakes.
I didn't want to try things out.
I didn't have the money for a consultant.
And so in this Babies R Us experience, I walked in and I think I did not even add one item to my registry.
I put the scan gun down and I like walked out in tears.
And I've heard that story from so many people in these good old days, when there were so many baby stores around.
Like that's kind of like what it was like.
Yeah.
And I was like, I know exactly the baby registry I would want.
And that's the thing that I was really excited to like.
Now build still again as like a really fun project, like much less like oh, this is the company I'm now going to work on for 15 years.
All right.
So, OK, so you have this experience and it happens.
Was it immediately revelatory to you?
Was it like a light bulb moment, or did it kind of percolate for some time and get you thinking there?
You know like there's be a better way to do this.
Yeah, I thought a baby registry, it's a list of products.
You can go buy the products.
But I could see exactly how I wanted it to work.
And so one example is they all looked terrible.
They were pink and blue with giraffes.
It felt embarrassing to send that out to family and friends.
I was like, I want this to actually feel modern and to feel cool to send out.
I really wanted it to work across retailers.
Most baby registries were single store registries.
And so you could only add items from Babies R Us.
And then you'd have a second registry for Amazon.com.
Or there were a couple like general universal wishlists where you could add items from a few sites, but it would be a wishlist.
And I wanted to ask for these other things.
So we had a dog, we had adopted her in Mexico, Pasa.
And it was like, if someone could walk her every morning, like that's such a meaningful gift.
In retrospect, this was a terrible idea, but I was very into cloth diapering.
Like I thought cloth diapering was like the right thing to do.
The cloth diaper service, it cost $60 a month, which was a lot of money.
And so if someone could be like, we'll get you February for your cloth diapering service in 60, that felt amazing.
And so I just, so what it felt like is I knew exactly what needed to be built.
I think my aspirations for it at the time were like oh, maybe this will be a great side hustle and it could make some passive income possible.
And like always kind of be on.
So it would be like worth me building it, because maybe then over many years it'll make a little bit of money.
All right.
So let's go back to kind of just your kind of this idea is germinating.
Right.
Which is you had this experience that babies are us.
Right.
The problem is, is that many expecting parents know they need a lot of junk.
OK, stuff.
I should say junk.
They need stuff.
Right.
But they don't know exactly what it is they need because they're all of it.
No one teaches you how to be a parent.
Like all of a sudden you're like, oh, we're going to be parents in nine months.
How do we do that?
And then like the baby's born and you go home from the hospital like I remember it.
You remember you're like, OK, I guess we got to just figure it out.
Yeah.
I talk to people, particularly people who are interviewing to be employees here, and they're like well, I don't have any kids.
And I'm like, yeah, neither do our users.
Our users don't know what any of this stuff is.
Right, because they're the ones who are buying the gifts for the expecting parent.
In this case, our users are the expecting parent.
That's right, right.
I remember not knowing...
What is a diaper bag?
Why is a diaper bag different than a backpack?
What is actually a diaper pail?
Is that just an expensive garbage can?
Like I had all of these very, very basic questions.
Yeah.
A diaper changing table.
Why do you need that?
Well, you do because then the baby's going to roll off.
You need that diaper, you know, that sort of half moon shape.
Yeah.
Do you need a crib and a bassinet?
How does your car seat work with your stroller?
Like, there's so many questions.
You need the baby swing.
You need the Harvey Karp tapes, the F7Ss or whatever they are.
You need it all, but you don't really know, right?
And so you knew that.
That's a problem.
But the other thing is, if I'm understanding your thought process correctly, is that...
You wanted other stuff like maybe cloth diaper service.
And it would be cool if like, one friend could fund that for a month and then another friend could fund it for another.
So you wanted like more than just the stuff.
You wanted optionality, like ways for people to help you with other things that you would need as an early like in the early days or in the first six months.
And I wanted the family and friends who were getting you those things to feel like they were getting you a great gift.
Yeah.
Yeah.
Alright, so you're pregnant, you're doing consulting work and on the side you start to write the code.
And it's just you like tapping your fingers on the keys furiously, not furiously intensely working on this thing.
Yeah.
So I ended up quitting my consulting job.
I truly at the very beginning when I had the idea, I thought I can get this done in one week.
And that wasn't true.
I think it was maybe one month before I actually made the MVP go live.
So I was really, really taking this minimal viable product seriously.
A logistical question.
You had the hard skills.
You knew how to do the engineering.
But there's a difference, right?
Not everybody, not every engineer knows how to do a user interface, right?
How to design a beautiful page.
Were you able to also do that yourself?
Well, that's so I I knew I couldn't do that part myself.
I brought on a designer and she did that.
And so I posted to this online forum about the project and that I was looking for a designer.
I think I had one real response and it was from this woman Lindsay, a design student in the Philippines.
And so we partnered on this first version of it.
Got it.
Okay.
And how many hours a day were you working on this?
I was probably working like 10 hours a day.
Yeah.
Some other things I had really – you asked like how did people learn about Lengua Hero.
Right.
In this case, I was like distribution.
Like I need to figure that out.
This is going to be the hardest thing is how do people find this.
Yes.
And so I remember it felt so uncomfortable to do.
I was avoiding it and avoiding it.
So I forced myself to go to a coffee shop and say – you can't leave this coffee shop until you've sent 10 emails to 10 bloggers that you're going to launch this thing in the next couple of months.
And for each of them I created a registry which products, like products that they themselves recommended or would like.
So there was an eco mom website.
So I put a lot of green products on it.
There was a design mom blogger.
I put a lot of MoMA products on it.
So they could really see that this worked and you could really express yourself because you could choose products from any store.
And then launch was the very beginning of February 2011.
And there was a really popular discussion board for technologists that works like Reddit, called Hacker News.
And so I posted to Hacker News, I'm a pregnant hacker.
Please review my side project.
And it just linked to BabyList.
Got it.
Okay, so you launched this in February of 2011, just a couple of weeks before your son was born.
It's a minimum viable version of this.
So it's a bare bones version.
But how did you have products available?
I mean, it's you and a coder or a designer in the Philippines.
You're, at that time, and I don't mean this pejoratively, but you're nobody, right?
You don't have any deep connections to you know hasbro, or you know like gerber or whatever these companies are.
How are you selling anything?
Yeah, we didn't need any stores permission.
If you had a website, like the BabyList button would work.
And then what it looked like to the gift giver is.
You would tell BabyList you were going to buy the item.
And then you would click over to the actual website that sold the item.
And then you would buy it as normal.
And would you at that point?
Would you get an affiliate fee, or were those programs not fully realized yet?
As BabyList was launching, I think I started to apply to affiliate programs.
Got it.
You come to my registry.
You click over to Target to buy a $100 stroller.
Then Target would pay us some percentage, let's say 5%.
So we'd receive $5 of whatever you bought because we referred the traffic to Target.
And it's a part of their marketing spend.
And so that was the original business model for BabyList.
Okay.
And how many of those bloggers that you wrote to, or I mean, did most of them write about it?
Five of the 10 bloggers wrote about the launch.
It was fantastic.
One of them started to rank for best baby registry in SEO, so in Google.
And that was also the steady stream of traffic that drove baby list registries for many years, but particularly in that first year, like a couple every day.
All right.
So now you find yourself a mom with a newborn and a startup, and you're running your second startup.
And it's already getting a little bit of traction.
You know, I mean you know in the, in the first days and weeks after you launch, so can walk me through the first few months of Max's life while you are.
You know you're with him, I think right.
Probably mostly on your own.
Tell me about how you were doing that.
I really wanted to stay home with Max for like up to a year.
And August was going to university in Vancouver.
It was actually like a very difficult time.
It was very isolating.
It was very lonely.
Max was like a Velcro baby.
He needed to be held all of the time.
And I feel, even saying all of this like, I feel like I need to caveat like and he's literally the most wonderful 14 year old.
And like it was.
But at that time, it was like, this is what the next 18 years of my life is going to be like.
Like, what have we done?
It was winter in Vancouver.
I was home all day.
And for me, like BabyList was this really interesting thing I could think about.
And I had a goal in those first couple of months, which is I want to spend 45 minutes a day on this.
If I can spend 45 minutes a day on this, like that's a really good day.
It sounds to me like it was almost like it gave you this structure that you crave, that you like, really need it.
It was structure and it was also so fun and it was actually going really well.
So in the 45 minutes, I could close a door, which was our second bedroom, which was an office.
I would fix two bugs that customers had mentioned.
I could answer five customer support emails.
Maybe I would email a blog.
And compared to Lenguajero, in its second month, it made $140.
And so it was just so clear that this was actually really working.
Which I should say, many startup founders would find very discouraging.
But based on your previous experience, where the best month you had with Lenguajero was 40, you're thinking hey, there's some traction here.
It was, hey, the really hard parts about this, it's people learning about it.
And so when it was making 140 a month, it was actually just from a handful of registries, maybe 10 registries.
And so it was so clear wow, like this is going to make more money if there's 10 times more registries.
Although it was only $140, it was really clear it could get much bigger.
When we come back in just a moment, as BabyList starts to catch on, Natalie realizes how hard it is to hire people and fire them.
Stay with us.
I'm Guy Raz, and you're listening to How I Built This.
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Hey, welcome back to How I Built This.
I'm Guy Raz.
So it's around 2012 and BabyList is getting some traction and Natalie is getting instant feedback from users by doing all of the customer service herself.
I remember getting an email from someone And she was just like, this is so confusing.
And I think the thing that was really confusing was how do you say that you want any amount of a product?
So let's say for diapers, get me like I don't need to say I need five boxes of diapers.
Just keep buying me diapers.
Keep that on the registry as long as people are buying it.
And that I emailed her back like the same day and I was like hey, which of these phrases do you think actually would work better?
And one of them was no limit.
One of them was any quantity.
And she was like, oh, I think it's that one.
And then I remember just updating the code, emailing her back five minutes later and saying like oh, now that actually works is live on your registry.
It was stuff like that.
Even today.
I think that those early years of just talking to users and customers every single day was really really important for how I show up to my job today.
I mean, I just think it's awesome that you had this goal and you're working on it.
So it's like getting, you know, it's a cliche now, it's like getting 1% better every day, right?
1% better every day, probably every month, maybe getting 10% bigger.
So it was really growing.
And in the summer it was like okay, I'm going to take some of the money that this is actually making and I'm going to pay a babysitter.
And I would go around the corner to a coffee shop for three hours.
I would do that, I think, two days a week and then three days a week.
So then I had these three-hour blocks now to actually work on it with my laptop in a coffee shop.
Wow.
All right.
So you're working on this and by the one-year mark, February 2012, Max is a year old.
BabyList is a year old.
You start to see some, you know, like not just 100 or 200 a month, but like 3000 a month.
I mean, that's real, especially given that your costs were pretty low.
I guess they were pretty low, right?
You had some server costs.
Because this was all self-funded, right?
Yeah, costs were pretty low.
Truly, the only real expense would have been to hire software engineers.
And me and Lindsay were both working for free.
You didn't need to hire an engineer.
You're the engineer.
Yeah, exactly.
So yeah, it was it was it was a high margin business.
And the 3000 really represented something which was I was gonna get a job, like I was gonna go back to work.
This was going to be a side hustle.
Yeah, this was going to be a side hustle.
I was going to go interview four jobs, get back in there.
And I think August and I in conversations we set the number 3000 where we said OK well, if in a year this is making 3000 a month, like this is really working.
And that's the thing that I should actually go to full time.
So can I ask you a question about that number?
This is 2012.
That's $36,000 a year.
Not a lot of money, but why was that the number that you wanted to hit?
It was a magic number.
I don't know why.
It wasn't coming from a spreadsheet.
And it wasn't coming because it's actually the salary that I wanted to make, or we could live on.
It was really just representing this business is actually really going to work.
This is going to be the thing.
I'm not going to go get a full-time job.
This is now my full-time job.
And it was about this time period.
We had never really gotten comfortable in Vancouver.
And we visited friends in the Bay Area in San Francisco and absolutely loved it.
And so we moved to San Francisco when Max was one year old.
And that's when I went to BabyList full-time.
Was there any part of you that was worried that it was risky, or were you feeling like?
No, I think we're.
I see that this is going somewhere.
At that point, it didn't feel risky or scary.
It was still just me.
So if it didn't work out, I would be able to just shut it down quietly, like what we had done with Lengua Hero.
And you had hard skills, right?
You could always go back and... get a job as an engineer somewhere.
Yeah, and I had this thing to show for it.
I could say, oh, look at this thing that I built.
But it actually felt like I think that year was.
Now that I have all this time, I'm not actually sure what I should be doing to make this successful.
I'm stuck in my living room and I'm doing customer support.
What is the right path for this next stage?
And it doesn't sound like you had this sort of OK, now I'm going to do, I'm going to get to this point and then I'm going to go and raise venture money and then I'm going to do this.
Like you weren't thinking or were you thinking that far ahead?
I was absolutely not thinking about raising venture funding.
It didn't make sense because the business itself was making money.
So it didn't make sense to me.
It didn't feel like the hardest thing was having money to spend.
There was like this other hardest thing, which was like, how do I make this grow?
But still, I guess at this point, to get some support and a bit of money, you decided to apply to an accelerator program in the Bay Area called 500 Startups, I think.
And you got in, you were accepted.
So how did that go?
What was it like to be part of that?
Yeah.
They give you $50,000 for a percentage of your company.
So it was really that first funding round.
And life was going to get really busy.
And I was going to drive now from San Francisco to Mountain View every single day.
And I've been asked the question, like, what was it like going through that program with a toddler?
Yeah.
And that part was fine.
It was really hard though going through the program as a solo founder.
It felt like I might have been the only solo founder.
And so it felt like I was the only person with a company of one person.
And there were... teams with five founders or at least with three founders.
And so you want to take advantage of every part of this program.
And everything's set up because they're kind of acting like you're three or four people.
Plus, I'm literally still doing all of the customer support for BabyList.
So it felt like completely overwhelming to be doing it all myself.
And I had this new $50,000.
And so it was really, really clear that I had to, for the first time, had to bring on new people.
And when you kind of talk about, like, was it scary to go to it full time?
I don't think it was, but it was really scary to say, oh, you're now going to join me.
I have this real responsibility to you as an employee.
And what about raising money?
Because up until this point, you hadn't raised money.
Now you're in an incubator.
So how did you go about starting to think about bringing in some significant money to start building the?
You know, hiring people had expectations.
But on the other hand I was like I think if I raise money like it's going to really turn this into a real business.
I made the decision to raise a seed round and my actual framing was like I think I will learn much more by doing this path, even if it's the more difficult path.
Like it felt like it was really adding like a new part of my job, which would be managing investors, having other people really own parts of BabyList and really wanting it to succeed.
And I also didn't know if I could raise money, like it's something i had never done before.
And what it really felt like was like people were doing me a favor by investing in this business.
It didn't feel like i did not have the vision and the confidence to say, like this business is going to be a hundred million dollar business.
It was really hard for me to say.
And then like this is actually how big this company will get.
So how did you tell me about the process?
I mean, raising money is hard, right?
Because you've got to ask people for money.
Yeah.
How did you handle that?
I created a pitch deck and I remember it had a slide that was like pregnant women need a lot of stuff.
That was so basic, but like is so true.
And the core of like why this business works and described really our current traction, which was really impressive.
People would sign up and they would actually really use the service.
That was really important.
Then, as part of the accelerator program, you have these demo days, where you get up on stage, you pitch for five minutes and then investors can choose to talk to you.
Out of that, had some real interest from great seed investors and ended up raising $600,000.
All right.
So $600,000.
And with that, you were able presumably to hire, I think you hired about five people.
Yep.
Hired about five people.
The real goal was we need to build an iPhone app.
And like that was going to require hiring an iPhone engineer.
That's something I didn't know how to do.
Hiring our first marketer.
I think at that point, actually, with the five people, we all still did the customer service.
I felt like it was that important.
Yeah.
So I read that you felt like you had a hard time.
It was really hard for you to hire.
You just didn't really know how to look for what kind of person to hire.
Yeah, it felt so hard to say, this is the job that I need to have done.
This is the person and the experience they're bringing.
And here's how I'm actually going to interview them.
And here's how I'm going to convince them that they want to come work with me.
It was really difficult.
I had, during the accelerator, I brought on someone first as a contractor.
She was a generalist.
She was able to do a lot of things.
I really wanted her to join full-time.
And I gave her a job offer that she was really unhappy with.
She really saw herself more as a co-founder than an employee, and so it came down to the amount of equity that she was being offered.
And she decided not to join BabyList.
And I was devastated.
I remember crying in a stairwell and just feeling like, oh, this is now back to just me.
Like, I guess I'll just go back to work.
And that time, I think the only thing I did for the next week was I just did customer support work.
Like for the week, I didn't try to do other things.
And it was really grounding where I was like, well, like our our users are still so wonderful.
They still really care what we're doing.
I'm going to get back out there.
So tell me a little bit more about the challenges of hiring because this is really hard.
Like we don't – most of us aren't trained on who to look for.
And, in most cases, on how I built this, like when people talk about challenges mistakes, errors or just – it's hiring, because we often trust our intuition or we like somebody.
And sometimes it's not enough.
Yeah.
The other thing that's really hard about hiring is you're hiring someone to do something better than you could do it.
And so even evaluating, can they do this better?
And how do I evaluate whether someone's a great marketer?
If I don't really understand marketing, it's incredibly difficult.
You're also probably... Even if you hire someone...
How do you set them up for success in such an early stage environment where things are really changing day to day?
And then I remember the very first person I let go.
And it was agonizing.
It felt so horrible.
And that we were in this co-working space with no privacy.
Like, how do I actually have this terrible conversation with this person face to face?
I had never managed anyone in my life.
And now I was managing them as the CEO of this startup.
I think I was terrible at it for years, few years, and I ended up getting a coach.
And the coach she came in and she interviewed everyone around me and she gave me a seven page PDF.
And the first three and a half pages were like here's all the ways Natalie is like truly great at what she does.
I felt great.
And the second three and a half pages were like here is just all of the ways that Natalie really needs to improve.
And she was very goal oriented.
And she's like at the end of our engagement in six months, like how would it feel if we hit these three goals that really pertain to the feedback and the anxiety I was feeling.
And one of them was in the moment you'll be able to give someone quick feedback, feedback without it feeling emotionally charged.
And I was like, oh, my God, if we could do that, that would feel so good.
And I think she gave me like the most basic tools we would meet every single week.
And I think I actually really transitioned to like being a like a pretty good people manager and like a pretty good leader with like these very basic skills and coaching.
All right.
So you've got this team.
And tell me a little bit about how the brand is growing.
Are you spending money on advertising?
How are you getting more and more people to become aware of it?
So, yeah, BabyList was continuing to grow.
We were continuing to make the product better.
We launched the iPhone app.
But we actually didn't really figure out marketing until 2015 and then we really figured it out and it was a very big inflection.
I think kind of in those first couple of years, That was the one thing we needed to have work.
And it was really the one thing that wasn't really working.
So people were using it.
People were hearing about it from their friends.
And more people were using it every year.
But the growth was pretty slow, kind of slow and steady.
But the beauty of it is that it is viral, right?
Because once one person uses it 20 30 40, maybe more people are going to engage with the site and buy something on it.
So it has that inbuilt virality.
Yeah.
At the very beginning, we would describe it as slowly viral.
So 30 women would all use it.
They'd all go to your baby shower.
Maybe then like two would get pregnant the next year and use BabyList.
And so it was slowly viral, unlike maybe some social network where everyone's signing up every day.
And Pinterest.
Out of all the social media sites, you really, from what I read, you really targeted, like Pinterest.
You optimized the site so that it would work with Pinterest.
How did you tell me how you did that?
Yeah.
So Pinterest was really up and coming and then scaling with exactly our demographic, with women, about the ages of women who are having babies.
And BabyList like was absolutely growing organically on Pinterest.
A really important thing happened in 2015.
And that's that Pinterest opened up their platform for advertisers.
And so they had the Pinterest promoted pins where you could pay them like any other advertising platform.
And they would show your pins more often to more people.
We finally got into the program.
We put... money in on the first day and many people signed up.
And the key thing about BabyList is it's free to sign up and hopefully, three months later, actual people will start coming to your registry, and that's when we actually make money.
Yeah.
And the business just actually had that hockey stick growth by like actually figuring out this first paid growth platform.
Yeah.
That year, 2015, I think you also had your second child as well.
Yeah, 2015, I had Ben.
So you were living this.
I mean, you were literally creating this new model for baby registry and you yourself needed to be a consumer of this product.
Yeah, that's true.
And I also at this point, I had been so steeped in all of this.
I knew all of the products that were out there.
I think I did have some good ideas for the business by going through the experience that time.
That year, it was just so important.
I had a team where the team themselves could really continue to run the business, as I took a couple of months off.
I wonder how you were getting, I mean the sort of the affiliate programs with Amazon and Target and others.
You just kind of plug that in.
But then you started to work directly with smaller vendors.
Right that maybe weren't at Target and Walmart and on Amazon.
Was a lot of that traffic, incoming people starting to connect with you guys saying hey, can you sell my stuff too?
So at this point, we were never selling stuff directly.
We had this really, really big decision where more and more people are using BabyList.
And we're like, what's next?
What's the next big thing that BabyList is going to be?
And the really obvious choice was we should now go into a wedding.
We're this tech company.
We've created this fantastic baby registry.
The technology would apply to wedding registries.
That's what we are.
We're this tech company.
And the other option was the most valuable thing we've really created is this trust and engagement with women and parents when they're having a baby.
And everything we do should be really serving them in more and more ways.
This was a big decision.
I think I learned a lot about weddings.
I talked to a lot of people and really made the clear decision.
We're not doing that.
We are going to be this company.
Everything we're going to do is going to be for expecting and new parents, which really then opened up.
So like, what is Babyless going to be?
When we come back in just a moment.
Natalie takes a big risk by shifting away from affiliate marketing to selling inventory directly to consumers.
Stay with us.
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Hey, welcome back to How I Built This.
I'm Guy Raz.
So it's around 2016 and BabyList is branching out in new directions.
The company's starting to create content, articles and videos about parenting and baby products.
We hired an intern and her job was to create this very first version of our content.
She sent out a survey with all of our users to say, what are your most loved products?
From that, she would create like the best stroller guide, the best car seats, the best bottles.
And at this time period, if you were searching Google for these, you would just get slideshows.
And we put them up.
They started to do well in Google, particularly like the best bottles guide, which was been my experience in Babies R Us.
It is the most confusing category, even though it's not that expensive.
And I think it was really the beginning where BabyList was, this company for expecting parents and new parents, like not just this baby registry?
One of the things that I – from what I understand, around by the end of 2016, so you're now at least four years into this more, almost five.
You have about 20 employees at that time.
And so you're still relatively small but growing quickly, 80% growth.
Is the majority of your revenue coming from essentially affiliate fees?
Because you guys were not –
You didn't have like warehouses of stuff, right?
This was basically you would order, but then whoever you're ordering from is sending you the product.
Yeah, we actually were making almost all of our revenue from a handful of retailers.
And it felt really risky to hire more people.
It felt like, if any of these relationships with retailers change, like I'm not going to be able to make payroll anymore.
And very naively, we were like, well, we can be a retailer.
Like we can actually sell this stuff.
And so this very first test we did, it was very lean startup.
We were like, does anyone, would they ever even buy from BabyList?
And so I went to Buy, Buy Baby, and bought a bunch of products like put it in the trunk of my car, drove back to the office.
And for all of these products, we would now show, like buy it from BabyList on people's registries.
And we were so naive about how hard it was actually gonna be to do the logistics side of this business.
Our current CFO, Jocelyn.
She interviewed, I think, around this time, maybe a couple months after we had really started to launch this e-commerce.
And we gave her a presentation to do.
And her presentation started with here's all the ways.
E-commerce is terrible and we should not be going into it.
You have to collect sales tax on like for every state.
You have to deal with returns.
You have to deal with products that are being discontinued.
Like she had a list of 40 things that were all so difficult and so outside of our skill set, as like a tech only company.
And it took years before it actually paid off in any way.
But then in retrospect, as our retailer relationships changed and as the company grew, it became like the actual core part of our business model.
But in the very beginning.
No one would sell to us.
They really wanted you to have a store if you were going to sell their products.
So I would get on the phone with CEOs of companies and say, please take this bet on us.
Our first warehouse was our office.
And so between everyone's desk, we had bassinets piled to the ceiling so you couldn't see anyone.
That business just like, it was so painful to grow.
It's so... much harder to do than digital.
Like with code, you can fix a bug and things work.
With actual physical products, you need many trucks and people to move those products.
Like it's actually so difficult to fix when things are going wrong.
But why did you decide to shift into that?
I mean, essentially, you were going to warehouse products.
You were going to hold inventory, right?
Which is risky.
And I guess it's because...
In the long term, the margins are better?
Yeah.
So this original business model was affiliate.
And it was actually a very good business model.
It was just so risky.
And so the decision to actually do this e-commerce ourselves and really change what the business was going to look like had to do with controlling our own destiny.
So, as you start to make that transition, when I mean because I think today you still, of course, don't write, you don't not all the things you sell you're holding in warehouses?
But what's the sort of the break?
The percentage breakdown is most of the stuff that you sell, that sold through BabyList, held in warehouses that you guys control.
It's really, really important for our user experience that we are universal and we do something no one else does, which is, when we sell a product and Target sells the product, we're actually gonna show Target as a buying option, just like we show BabyList as a buying option.
People absolutely love that.
It's why they actually use BabyList.
We don't share the split, but the largest part of our revenue is absolutely us actually selling the products we sell as an e-commerce retailer.
So you've got this sort of transition, right, to this model or kind of a hybrid model.
And then COVID hits.
And this is really when you're starting to sell directly.
Tell me about COVID because because on the one hand, I would think that I mean, it's scary.
But on the other hand, I would think that maybe this would have been a huge moment for BabyList that all of a sudden, people are at home and people still need to.
People are still getting pregnant.
There's still baby registries.
There might not be baby showers in person, but people still want to support a friend who's expecting.
When COVID hit, I had been running the business for nine years.
I felt like I was the world expert in baby showers and baby registries.
And I actually had no idea what people were gonna do, because baby showers it's an in-person party with a vulnerable population.
And I actually was not sure that people would need baby registries without a baby shower.
I thought that this actually would decimate our business for potentially years.
That March, all of our numbers completely plummeted.
We implemented a hiring freeze.
But then exactly what you're saying happened.
There was this shift to online.
People wanted to help you more.
They want.
Like if you were the person in the circle of friends having a baby right now, people were like more generous to send you gifts.
Now they were buying them all online.
Our business actually grew more than we had expected that year.
Yeah.
And you guys were sort of on a roll at this point, right?
Because, I think the next year which, which is 2021, you were able to raise a substantial amount of money in another fundraising round, like 40 million dollars.
Yeah.
So again, just like our seed round, I was not sure I was going to be able to do this.
But it was the right time.
It felt like a really important maturation and inflection point for the business.
So... created a pitch deck and this was all over Zoom because it was this COVID time period.
So, without meeting anyone, I would meet them over Zoom and I would give them the pitch and they would all start with no.
They would, the investors would be like, we don't, it would be a really soft no.
Like we don't really ever invest in anyone.
We're meeting for the first time, but it'd be great to hear what you're up to.
I ordered the pitch in this very specific way that was like the very first slide was our revenue.
And I'd be like, here's our revenue.
In that year, it was going to be $250 million.
And they'd be like, oh no, you mean, this is your GMV, which is your gross merchandise revenue value, like what you're actually sending to other retailers for their sales.
And i was like no, this is our revenue.
And they would lean in.
They'd be like oh, i have to get my partner on the call, and so the the process.
It absolutely had rejection.
But the investor we eventually went with um was actually it's norwest venture partners, and i've seen companies raise too much money And I think part of it is this wishful thinking of like, how is the business now going to grow?
And with Norwest we were like very aligned in, like what our expectations for how the business is going to grow.
It really forced us to really grow up, get serious about our finances, saying what we're going to do and then doing it.
So tell me a little bit about the vision, for I mean, you've got obviously, registry is still the main thing that you do.
But there are all these other sort of verticals and and revenue streams that you've created in the last few years.
One is like helping people get breast pumps, which I think is insurance, but some insurance covers it.
In some cases, it's Medicaid if people are eligible for Medicaid.
So that's a revenue.
That's a new revenue. vertical that you offer.
And give me a sense of what the sort of vision of what you want BabyList to be moving forward.
Yeah, I think it's actually all about making families better families like helping grandma be a better grandma, helping families stay more connected.
Like that's truly the baby list that we're building, which feels very meaningful.
In 2019, I was eight years into building the company.
And it was the first time I really saw like how big this could be.
It was the first time I actually thought this could be a billion dollar business.
And then, in 2022, we really started doing the thing you're naming, which is like what else can we offer new family, like new parents?
And so us getting you your breast pump for free, that's what we call baby list health.
So I think there's this opportunity for us to really be a health platform.
When you're having a baby, like health is the thing you care about, like much more than this stuff all of the health and wellness aspects to that time period.
Yeah, that's definitely where we're leaning in.
When you think about you know where you are now and the journey.
You started.
This in 2011, basically.
And it's you know.
I think it's one of the biggest baby registry sites, if not the biggest, in the US.
How much of that journey do you attribute to the work you put on the grind?
And how much do you think had to do with just luck and timing?
I think the initial idea and like the lessons I had learned and me being able to code all of this kind of coming together when I myself was having a baby is like total luck.
I think where though, the grind comes in?
I think it's been a lot of really hard work that I've had to put in to really make the transition from founder to CEO.
And I think I really have put in that work.
And I don't think that that work is like luck.
I actually think that has been like grit and hard work.
That's Natalie Gordon, founder and CEO of BabyList.
By the way, you can see photographs of their entire team on the company website.
And if you move the cursor over each photo, you will see what each executive looked like as a baby.
Hey, thanks so much for listening to the show this week.
Our engineers were Patrick Murray and Jimmy Keeley.
Our production staff also includes Alex Chung, Elaine Coates, Casey Herman, JC Howard, Chris Messini, Sam Paulson, Ramel Wood and Andrea Bruce.
I'm Guy Raz, and you've been listening to How I Built This.
And don't stop the podcast just yet, because right now you're about to hear an amazing small business story that you don't want to miss.
This segment is presented by American Express.
With a business platinum membership, the best just got even better.
And this week's story starts back in 2009, when a former Dell engineer named Peter Mann set out to solve a very personal problem.
My son struggled with asthma.
When he was an infant, he would have an asthma attack to where he would change colors and not breathe.
And it was really distressing.
Not being able to do much for him, as he was a little bit older, more middle school age.
He would have an asthma attack just sitting on the couch.
Peter learned that one of the big triggers for those asthma attacks were allergens and other particles in the air.
So he started looking into air purifiers, and he was pretty underwhelmed at what he found.
It's almost like bulletin board looking terrible websites.
And some of them are selling these same products with just different logos on them, on their product.
Peter came from the world of tech, so he knew how to develop a product and market it online.
And he thought, why not just do this myself?
So he hopped a flight to Hong Kong, negotiated a deal with a manufacturer, tested some samples and about six months later Peter's own air purifier, which he called Oransi, arrived at his door.
I remember opening it and plugging it in and turning it on.
And within about 15 or 20 minutes, the air just felt different.
And his son's scary middle-of-the-night asthma attacks?
They went away.
It wasn't waking him up, which wasn't waking us up.
It was just a huge win-win.
Customers loved the product, too.
And Aransi's sales grew steadily over the next decade.
When COVID hit, demand for Peter's air purifiers skyrocketed.
But so did the competition.
It just got to the point where it was oversaturated.
So Peter decided to pivot and focus instead on the technology inside the device, specifically the electric motor.
He merged with a partner, bought a huge factory in Virginia and built an air purifier in-house from scratch as a way to validate the technology.
Now Peter's setting his sights on a much bigger market, with a seemingly endless demand for cool, clean air AI, data centers.
Now, around the same time he made that pivot, something happened in Peter's personal life that completely changed how he looked at his business and himself.
In 2022, my wife was watching CBS Morning Show.
And in April, they do profiles of people that are autistic.
And she's like, oh, you need to see this.
And I watched it and I was like, oh, my gosh, I didn't know it.
Like now so many things make sense.
Peter thought that's me.
The hyper focus, the ability to build systems and some of the social challenges he'd experienced as well.
Sure enough, at age 55, he was diagnosed with autism.
I did a LinkedIn post and I said, you know, hey, I was recently diagnosed.
If anyone that's autistic, that you know is going through interviews or navigating the workplace wants to talk, I'd be happy to talk.
And wow, I had video calls with dozens of autistic adults.
Probably 75% of them were just struggling with the interview process.
So he's spending more time thinking about ways his company can set people up like him for success.
This kind of hit me like my son's asthma did.
By the way, the son whose asthma attacks inspired Aransi to begin with, Peter says he's doing great.
He seems to have largely outgrown it.
He still has an air purifier.
All these years later.
That's Peter Mann, the founder and CEO of the air purifier and now electric motor company, Aranci.
His small business spotlight was presented by American Express.
To build a business like no other, you need a card like no other.
There's nothing like business platinum.
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