Operators Ep 17 Transcript

Delian: [00:00:00] Hi everyone. My name is Delian and I'm a Principal at Founders Fund, a venture capital firm based in San Francisco. This is Operators where I interview non VC, non CEO, non founder operators that make the startup world go round today. I'm interviewing Ian Fliflet, Chief Growth Officer at OfferUp. Prior to joining OfferUp, Ian was the General Manager at GameHouse a computer games company. He also spent 10 years at RealNetworks, a digital media company, where he worked in corporate development. I hope you enjoy the show. Cool. Well, yeah, Ian, thanks so much for taking the time to be on the podcast today.

Ian Fliflet: [00:00:47] Very nice to be here.

Delian: [00:00:49] So maybe to backtrack a little bit to that earlier in your career, you started off your career as a business analyst at a, you know, RealNetworks, I believe it was called-

Ian Fliflet: [00:00:57] Yeah.

Delian: [00:00:57] ... which is, I guess, somewhat related to sort of what you studied, um, at University of Washington i, information systems. Uh, can you talk to us a little bit about sort of what RealNetworks was, um, how you ended up spending sort of over 10 years there and how you ended up as like the director of a, you know, Corp dev?

Ian Fliflet: [00:01:12] Yeah, for sure. So I graduated in uh, from college in June 2000. So about a month and a half after that first internet bubble burst. Um, when I was at the fall of my senior year in college, everybody's interviewing at all the consulting firms, uh, getting their jobs lined up. I never got any of those jobs. I'd never passed any of their interviews. Um, but what happened was it, as the spring came along, uh, anybody who had a job ready for them, uh, I was getting their start days delayed, uh, and it became really hard just to frankly get a job.

So, uh, the tech space in, and, uh, Seattle had, you know, exploded in the first, the first round of the, the internet. And there were a few companies out there. The Amazons, the Expedias, uh, the RealNetworks of the world back then, uh, were the, were the names. So I was applying for any job that I could get. I applied for actually an internship at Real. So, uh, RealNetworks, uh, for those of you don't know it, uh, they invented streaming media in the late '90s, uh, and back then to listen to, or watch any video online on your computer, you had to download what was called the Real Player, uh, to watch it. Um, so it, it was an interesting opportunity. So I took a job making 10 bucks an hour as a bit as a business analyst because it really, I couldn't get any other job and, uh, you know, I need to make some money, so I didn't live with my parents.

So I started off at Real, uh, and I got, um, I was in the consumer division. So Real had two divisions, uh, um, um, systems divisions, what it was called and they created the servers, uh, that websites needed to encode software and play video. And then the consumer division. So the consumer division was what managed, uh, the Real Player software and distributed it. So that right there, it was, I just kind of lucked into high volume software distribution and, uh, and, uh, uh, because the Real, the Real Player had, um, there was like 2 million downloads of a day of this software. Uh, at that, at some point we had 400 million registered users on the platform, which, uh, was kind of suspect since we didn't have 400 million people on the world at that point on the internet, but I, I got thrust into figuring out how to get people to download a free software and premium software.

Uh, the fun part there was that I was given a lot of, uh, leeway to come up with ideas and start testing them. So right off the bat testing button sizes, button colors, uh, two-step processes, order flow, uh, all that, all of that to try to optimize funnels. And that was my kind of indoctrination to high volume consumer software. So what I've done since then, and it all just started because I, I kinda got, I just happened to fall, uh, fall into it, an internship at Real, um, back in the day.

Delian: [00:04:05] It's funny. I feel like nowadays the types of roles that, uh, are responsible for yeah, optimizing button sizes and things like that definitely aren't called like business analysts anymore-

Ian Fliflet: [00:04:14] [inaudible 00:04:15], yeah.

Delian: [00:04:14] ... uh, assessing how the terminology has shifted. But yeah, obviously that's basically what, you know, honestly, most of growth is nowadays.

Ian Fliflet: [00:04:20] Yeah. Just kind of figuring it out, figuring out what's works and figuring out what the, what the levers are and testing them.

Delian: [00:04:26] And so I guess, yeah. How did the transition happen from, you know, it sounds like a, roughly six years in or so, uh, started got the promotion to like Director of Corp dev and spent about five years on that.

Ian Fliflet: [00:04:35] Yep.

Delian: [00:04:35] Um, how did that sort of promotion come about and then, uh, yeah, it would maybe love to hear a little bit about the corporate development. Like, were you sort of given a mandate of here are the types of companies we're looking to acquire or was it more companies coming to you? Um, what did that kind of look like?

Ian Fliflet: [00:04:47] Yeah, so that oppo, opportunity came about because, you know, like, um, a lot of people that far in four or five years into your career, you're looking at, "Okay, should I go to B School?" That was the thing to do. Um, so I was, you know, taking the GMAT and looking at those types of opportunities, but at the same time, Real had a big antitrust settlement with Microsoft, uh, for about, it was about $750 million, all in which in 2006 or '07 ballpark, that was a lot of money. Uh, and it stemmed from the Real Player, um, and, uh, windows media player back in the day, um, and, and, and relate it to how Microsoft leveraged that their operating system to grow windows media player at the expense of the Real player.

So it was a lot of money, uh, uh, a guy that I had gotten to know a guy named Steve was running corporate development, and, uh, he had an opportunity. So I jumped in there, uh, the edit for us was to figure out ways to smart, smartly, invest those dollars because given the relative size of the company and how much cash we had, we couldn't hold it, um, for too long, um, 'cause our enterprise value actually wasn't, it wasn't that high at the time. So we did a bunch of different things. So Real, we had at, at that point, a bunch of different businesses, um, that was six or seven years after I started.

So we had the Real Player business. We had Rhapsody the music subscription business, which was the first streaming music, uh, on-demand service. Uh, we had a big games, business, casual games for business that started out was called Real Arcade and then it morphed into what was called GameHouse. So we had a bunch of different businesses that we could, um, bolt, uh, acquisitions onto. So, uh, my, my induction and the Corp dev teams either was to go figure out, uh, and identify opportunities that fit well with our current businesses, where we could leverage the distribution. And so did a bunch of acquisitions of smaller, casual games, businesses, where we, uh, acquire con, content games, uh, teams, uh, studios all over the world.

Uh, we would find music streaming services to, um, bring in to combine with Rhapsody. We, we, uh, merged with Yahoo Music with their, uh, streaming service. We did a acquisition/joint venture with MTV where we brought in their streaming service, uh, and consolidated all of those. Uh, it was just a bit ahead of its time. Um, streaming wasn't quite as, as a, as it is today, there was, that was still back in the, "Are people going to pay for music at 99 cents forever and ever to own it, or are they going to ever, you know, just pay a subscription?"

Uh, so, uh, the thing about Real Networks was it was in a bunch of different businesses. So from a corp dev perspective, it was opportunity to, um, look at all kinds of different, uh, industries. Uh, what I got out of that, which kind of set me up for my next role is my role in corp dev was to, um, it was to look at a bunch of the smaller opportunities, a lot of the time. So I went to all the, early on went to the YC Demo Days, um, back in the day in that 2008, '09 timeframe. Uh, spent time with a bunch of the VCs in the Bay Area. Some of the early, uh, angels, spent a lot of time with Jeff Clavier back, back in the day when he had Soft Tech, which was really early on.

Um, so that was really fun. And that's when I got the opportunity to get exposed to startups and small teams that were nimble and able to make a big difference quickly. So brought in a few of those smaller startups where they had run out of runway. Gave them opportunity to work with Real and try to build something at Real. So, yeah, Corp dev is an amazing experience in terms of taking you from working inside a company and having one perspective. So getting exposed to different perspectives and different people, and people really have that entrepreneurial drive that, that founders have that in a big company people always say like, "Oh, you know, I'm a founder and we're just like a startup, you know, I'm at Google, I'm just like a startup."

Or we even used to say that at Real. The reality is you can't ever replicate everything about a startup, unless you're actually at a startup where you don't know how you're going to succeed. And failure means that you lose your job. So, yeah, so that was a really neat opportunity.

Delian: [00:09:20] Do you have any particular, I guess, like a favorite acquisition deal or maybe one that didn't quite make it across the line, but was close-

Ian Fliflet: [00:09:26] Yeah.

Delian: [00:09:26] ... at that time?

Ian Fliflet: [00:09:27] Um, I, the best one was one of the first ones that I worked on, um, was, uh, we were, um, so PopCap Games, which is the maker Bejeweled, uh, had a game called Zuma. And then of course, Plants vs Zombies. So RealNetworks had the distribution platform for all these early casual games. And PopCap was, uh, one of the most popular, popular games distributors on the platform. And at that point, some other, uh, uh, uh, distribution channels had opened up Big Fish Games, which was started by one of the early, uh, product managers at Real in the games business, um, was, was also getting a bunch of traction as well.

But, um, Plants vs Zombies and, and, uh, Bejeweled, Bejeweled was the big one act, actually at this time. Um, they were all, this was all on desktop and they were just starting to build games on the iPod. So I phone wasn't even a thing at that point. Um, and we came really close to acquiring them. Uh, we, uh, I think the deal was the term for something like 130 million upfront, uh, and with like a $10 million earn out, so $140 million acquisition. And, uh, when it came down to came down to it, um, you know, way above my pay grade, uh, we were negotiating really hard over that earn-out like, you know, the difference between 10 and 20 million, um, obviously in retrospect it was penny-wise and pound-foolish, but, uh, the deal blew up after eight months.

Um, uh, and it, it felt really, it felt like a failure and it was a failure, uh, even more of a failure in retrospect. Um, and that was kind of the first, my first experience of, of, uh, learning that, you know, that, um, if you don't have a big vision for these types of things, if you're too focused on the minutia of getting a deal done and worrying about stuff like that, you're gonna miss the really good opportunities. And that's kind of my biggest takeaway for my Corp dev time there is, uh, great companies are not sold. They're not the ones that you're getting pitched by the bankers, uh, um, incessantly. They're the ones that you go find, uh, that you're, and, and you have a vision of their future that generally doesn't align with everyone else's, um, and you take that risk. So, um, I think we can probably, you know, you're involved in this business more than I am, but you probably see seeing that be true more often than not for the really, really deals.

Um, so that's a hard thing to do because you have to be aggressive, something we weren't ever willing to do. Um, which, you know, started that started to get me, uh, in the mindset. You know, albeit way before I left of like, "Hey, I want to go try one of those... Um, I want to try an opportunity or take a career risk, um, at some point in my career, um, that I could, that just can't be replicated at a big company."

Delian: [00:12:20] And yes, I guess, in terms of taking a career risk, at some point you sort of left RealNetworks. I can't tell if GameHouse was sort of a subsidiary or was sort of a completely new company to think about like bought back in later, but yeah, I guess how did you sort of make your way to GameHouse? What did you work on there and then obviously eventually into OfferUp?

Ian Fliflet: [00:12:35] Yeah. So GameHouse was just the new name of the, uh, RealNetworks as business unit. Um, it was one of the companies that we had acquired actually locally in Seattle. Uh, so, uh, a friend of mine had come back to Real and he had been gone for a while. So I run the games business, and he was just looking for people internally who could help him kind of figure out what to, what to make of the business, because what was at that time, we were, uh, iPad and iPhone were just launching like V1 because Real had a bunch of content, they were early partners there.

Um, and then Facebook games was, was blowing up. That was back in the day of Zynga. Um, Zynga, uh, Poker was back. It was the first one. It was even before Farmville. Uh, and we had, so we had some content. And so I was, uh, it's not on my resume, but I was Director of Strategy to start out. And it was basically what kind of game should we build and how should we build them? Uh, so I spent six to eight months on that, and then he just said, "Hey, why don't you run this business? I have a guy who runs the studios, you guys partner up and build these games." Um, so I was just given the opportunity to figure a bunch of stuff out.

Uh, I owe a bunch, uh, a bunch to him. His name was Matt Hulett, he's actually the President of Rosetta Stone now. Uh, but he, he basically gave me more opportunity than I deserved. Um, and I was able to, uh, leverage a bunch of the learnings that I've seen in the past in terms of test, test and learn, uh, iterate, um, you know, uh, and figure out how to make, uh, a game work. So, uh, we were building games, um, primarily on, on the early versions of, um, uh, iPod, iPads and iPhones and on Facebook. So that's when I got my, um, exposure to the Facebook. Uh, it was right when Facebook adver, advertising opened up, so started spending money on Facebook to acquire, uh, users and figuring out how to create positive, uh, LTV to CAC relationships, um, cohort based analytics, uh, which I had developed an understanding and kind of affinity for in the music subscription business.

Um, so then I really started to get the opportunity to test, "Okay, how do I, what do I say to people? What type of ads do I create for people? How do I follow those users into their first experience, a product what's success look like? When do you break even?" Basically the, the, the, um, the beginnings of how all mobile businesses are operated today, if they're operated well, and then melding that kind of, we called it back then combining the heart and the math. So the math was all the, how do you measure the, um, the, uh, CPC, the click-through rate, the, uh, first-time user experience, LTV, all of that. And then combining that with the heart, in terms of understanding what resonates? Like what's a good user experience, um, uh, for a game, like what's the first thing that people need to do?

What do we want to optimize for what produces the user delight? Like what produces, um, the, uh, the, uh, success for the user that gets them to the point where they'll actually say, "Hey, Hey, but Hey, Hey, um, Delian you gotta try this game out. This is awesome." You know, so how do you get, how do you get to a word of mouth? So, I was just given the opportunity to, to learn all that stuff on the fly. Um, again, you know, um, failed, failed a bunch, um, but that was kind of the basis for, uh, jumping off into, uh, which ended up being a few years later and to OfferUp.

Delian: [00:16:02] Nice. So, yeah, I guess talk to me sort of, how did you discover OfferUp, what was sort of the, you know, early responsibilities? Yeah, it sounds like was had a pretty GM role at the end there with GameHouse and so were covering right different functions. Sounds like, sort of similarly, when you hopped into OfferUp is there a variety of different functions? What was like the scale of business? Um, and you know, what were the main things you were sort of working on early on?

Ian Fliflet: [00:16:22] Yeah, so, uh, OfferUp was... Uh, to go back a friend of mine who was, uh, who was actually the guy at RealNetworks who started the games business at Real back in 2000, a guy named Andrew Wright. He was an early investor in OfferUp, uh, angel investor. So, uh, I was actually contemplating going to work for him. Uh, you know, as a junior guy, who um, looking at investments for him. Um, but he, uh, he just, he couldn't, he couldn't get to that point where he would want to take on an employee. So he said, "You gotta meet Nick who's, um, who's our CEO, uh, OfferUp would be a good fit for you."

Because at that point OfferUp was there were three people, four people. So it was Nick, uh, who is co-founder, Arean who's, uh, who was our CTO, and then, um, uh, web dev and, uh, and they, um, a marketing manager. So, um, I just started talking to them and, you know, I was looking at a few other opportunities, but, uh, OfferUp was super open in terms of, uh, opening kimono in terms of, uh, of their metrics and their business. So I approached it just like I would a Corp dev opportunity, um, and went through a diligence process. And, uh, they were really dialed in from the early days, in terms of event tracking metrics way beyond any other four person startup I'd ever seen.

Uh, and the numbers were so good that I was, I was pretty convinced that they were double counting things because, um, uh, the retention metrics for through the roof, you know, had the classic, like smile curve in terms of retention. But, uh, really, really small scale. Really low scale. So this was, you know, we had like 2000 DA use a day when I was going through this in the summer of 2013. Um, and they were looking for someone to help with the marketing. So, you know [laughs]... I never considered myself a marketing guy. I just consider myself someone who kind of figured out how to make things work and grow.

Uh, but I took on that title. So, um, jumped in, it was, you know, exhilarating, I went into an office where there, you know, 600 square feet and there were five of us jammed in there. Um, but I knew right off the bat, the metrics were indicative of something really special. So OfferUp back then was... Actually have the metrics right in front of me because it's on the same dashboard. So, yeah, so I started in September 2013 and we had 5,500 daily active users on the app. And 80% of them were in the Seattle–Tacoma–Bellevue area. Uh, and they were spending some money on Facebook, but, you know, pretty inefficiently.

Um, so, uh, I came in and tried to said, "Okay, well, what can we do here?" And this was, it was the days of Facebook marketing and on mobile, nobody was targeting locally. Uh, I don't remember anybody targeting locally other than us. And you could just aggregate zip codes, cities. So we just experimented all day long with, uh, targeting in Seattle. Um, and then we quickly launched Portland, Oregon, and launched just means we launched a Facebook campaign [laughs]... and got people using it. Um, we started, and then we started to develop metrics in terms of what success looked like in cities.

So, okay. What, what, what do we need to acquire in terms of supply? What do we need to acquire in terms of demand? What can the, uh, acquisition strategy look like? What does the bidding structure look like? How quickly do we need people to, um, post their first item? Um, what, what, what is, what does good look like? Um, and so we just started iterating on that, uh, the app itself, this is the app back then, again, they had instrumented this thing with a bunch of levers to, um, that I could pull. So I could say, "Okay, show items within five miles, 10 miles, 20 miles, um, uh, put, put someone through this experience first, put someone into, or put someone in the posting experience first, put them into the category."

We could experiment with all those types of things, combine that with our acquisition at the top of the funnel, in terms of targeting the right users. And, um, we started to see success and it was, you know, it was probably the most fun time of my career because, uh, we were just watching, um, a product just to explode. And it was at the root of, it was just like an, a product experience that created success for people as buyers or sellers. Uh, and then we took that and then what happened was people started telling their friends about it. So we'd look at what's the ratio of the, uh, the organic installs to the paid installs in that accelerated. So that was the beginning, that was the beginning of basically, "Wow, OfferUp's going to be something here." Uh, and I was just doing the marketing.

So, um, pretty quickly after that, uh, you know, the word started to get out amongst investors and Nick started to go out on the road, um, to talk to people. Um, and, uh, you know, he, he had done a bunch of series a investor, uh, getting his series a done, uh, and, uh, the guy who led that it was a guy named Josh Breinlinger he's, um, Jackson Square Ventures. Um, and that took Nick a long time because nobody believed that, um, a horizontal marketplace was going to work. Um, it was all, everything was go all vertical marketplaces. Um, so he had gotten the Series A done on some very, very, very early metrics. And then basically, you know, uh, an investor who believed in him, um, but now we had a bunch of metrics.

So Nick went out there and he talked to a few people and he'd come back to the office and he'd say, "Oh, they're asking all these, all these data metrics like retention and everything." And I said, I said, "Okay, well, I can help you with that. You know, I've done that before." So I started to build out models, um, to, in terms of what it could look like, uh, started to build out, you know, our P and L. So then I, uh, at that point I quickly took on finance, um, hired an analyst to start building out kind of business operations, um, predictive models, uh, leveraging actually the actual same models that I had used in the games business. Um, and then we went out on the road and, um, uh, that was kind of later in 2013, early 2014. And we presented our metrics, you know, on the city by city basis with a plan to expand into other cities.

Uh, and that's when Andreessen Horowitz came on board, um, because, uh, you know, the metrics spoke for themselves and it can, I could have, uh, um, been any, any two jokers up there in front of everybody, but the metrics were, were, uh, were beautiful. Um, you know, everything you'd look for in terms of, uh, potential for scale, um, there easily, easily, you could easily extrapolate themselves. Uh, from there basically we got, we raised money from Andreessen and we're able to keep going on that, uh, um, uh, growth, growth trajectory by iterating. As we went into every new city, we would come across something new in terms of positioning, whether it was on the marketing side or the funnel side, or the, the repeat user, you know, user experience. Um, and it was off to the races for a couple of years after that we flew under the radar, uh, had, uh, had no competition.

We, we didn't, uh, draw any attention to ourselves, uh, purposely because we knew it would be, um, copied quickly. Uh, and it eventually was first by a couple of smaller shops, um, then by Naspers, which, uh, they had created Letgo, uh, and then eventually Facebook Marketplace. So, um, that was, I can jump in more into the details of that and the tactics. Um, but that, that was kind of the story. So I, uh, I was in the right place at the right time. I took an early career risk, um, uh, knowing that it may or may not work and, you know, came across an opportunity that I'm thankful for.

Delian: [00:24:16] I mean, you've got, I guess, a couple of macro questions that I'd love to dive in and sort of one by one, maybe the first one, given that you just sort of touched on it is, you know, I think a lot of let's say, uh, early employees at like a VC backed company, especially if you go through something like that, where it's like, you know, Series A, you know, it gets done early on, Series B gets done by, you know, top tier firm, attractive price, attractive terms, but then yeah, you actually have to go like build the business and scaling to it.

And then you're going to start to have like ankle biters. And that can obviously get worrisome, I guess, like, you know, what, what, what kept you guys focused? Was it still like, did the metrics continue to grow smoothly or did you start to see some real hiccups that you started to see sort of CACs go up competition, make liquidity in your marketplace a little bit more difficult? How did you guys start to sort of like, you know, deal with that? Um, and then, you know, maybe even, you know, even the risk if you're willing to just sort of chat through the most recent transaction with like, sort of like how, how-

Ian Fliflet: [00:25:04] Yeah.

Delian: [00:25:04] ... that sort of came about, um, and obviously given your Corp dev background, um, you know, how you guys sort of like, thought about that, the synergies of a, you know, I assume you were pretty involved in that transaction, given your-

Ian Fliflet: [00:25:13] Yep.

Delian: [00:25:14] ... background and where you focus on and sort of how that came to be, would love to hear about all of that.

Ian Fliflet: [00:25:17] Yeah, for sure. So, um, so, uh, first mover advantage, uh, is a beautiful thing. Um, one of the things that we discovered was that if you get, uh, early users, they're going to be, it's the classic adoption curve, the early users are, um, you know, your, your, uh, they're your best users. They have the most intense usage. They're the ones who are the champions for your product, and they tell their friends about it. Um, and for us, we, because of the opportunity we had to find all these users on Facebook, on a city by city basis, um, and develop this liquidity quickly, um, network effects, uh, organic network effects took over in each one of these cities. So we'd see, um, crazy cheap acquisition costs on a per install basis.

It was, you know, we'd have some markets where the cost per acquisition was 10 cents per install, um, with, with like 50%, um, uh, actually like, uh, post rates or engagement rates for us as what we call an engagement when someone sends a message and says, "Delian, you know, tell me about that couch, or how big is that couch?" So, so super productive and super cheap, uh, new user rates. Um, and those are the users that, that created the core of our, uh, liquidity, uh, for our buyers and sellers in every market in the country. Uh, and so what we would do is we would launch, um, one, one city a month, two cities, and of three cities a month, you know, okay, go faster and faster and faster.

Um, and that early strategy enabled us to create these, um, uh, um, liquidity beachheads in a bunch of the major markets in the country that work really well for C to C commerce. Um, and those are still our strongest cities today. And, uh, as the ankle biters, as you would call them, uh, started to, um, um, surface, uh, they couldn't penetrate those network effects, um, network effect, network effects, you know, your investor, you know, how strong they are. Um, and what's really interesting in this type of, in this space, see, to see there is zero switching costs for a consumer. So a consumer will try everything, but if they don't get the quick response rates or sell through rates or success that they get on the platform that they're comparing it against, they just won't go back.

Uh, so that was what enabled us to withstand a bunch of competitive pressure. Um, there were, uh, if I just boil it down into, um, uh, uh, Letgo, and then Facebook Marketplace, I'd say, uh, Letgo came a couple of years later, and they came in with a strategy to spend, uh, above the line advertising dollars, uh, to create brand awareness. Um, this was the strategy that they executed worldwide, uh, in the global classified space, um, to create interesting dynamics that you could, that you could read about, but basically they spent a bunch to create brand awareness, um, and create usage. And then, uh, you'd take out the incumbent or create friction.

Uh, so that, uh, didn't, that didn't inhibit our growth at all because of going back to being first mover and creating these network effects in the big cities in the country. Uh, it did enable them to create some traction and a bunch of different parts of the country where we hadn't focused, um, that, uh, in retrospect, I wish we had, but it was really, it was really a function of how much money we wanted to spend and how quickly we wanted to burn it, because, you know, we didn't have any lines of revenue back then.

Um, so where, uh, you know, we just completely completed the transaction with them this summer and the synergy there is the, um, they had strength in markets that we weren't strong in and, and vice versa. So synergy play there. Um, and, and it really goes back to our growth strategy and then, um, the timing of their growth strategy. And that was, uh, as you can imagine, that deal was many, many years in the making, um, those things don't happen quickly.

Delian: [00:29:21] Was gonna say, I assume at that level of scale, it's actually a deal that gets reviewed by the SEC. Right? Um, was that a process that you, you know, got to be a part of or was that sort of like preparing the, you know, documents to actually get it or started by the FTC?

Ian Fliflet: [00:29:33] Yeah.

Delian: [00:29:33] I see you got the SEC.

Ian Fliflet: [00:29:34] Yeah.

Delian: [00:29:35] Um, you know, w, what was going through that, like, I assume you had never done that a RealNetwork since I feel like-

Ian Fliflet: [00:29:39] No.

Delian: [00:29:40] ... there is no acquisition that you had, was that at that scale or with that sort of a competitive dynamic?

Ian Fliflet: [00:29:44] Yeah. Yeah. I mean, um, so yeah, I was involved in the deal from beginning to end, um, deeply, uh, and our general counsel, uh, worked on the, the, uh, um, antitrust and, um, uh, what's the, uh, the for, the CFIUS, uh, but yeah, definitely, uh, we would have gotten the deal done much earlier. Um, but that's a, that's a typical part of the process.

Delian: [00:30:06] CFIUS just because it's, uh, it's, it has a Chinese investor or owner, or...

Ian Fliflet: [00:30:11] Well, just being an international investor.

Delian: [00:30:13] Uh, interesting. So it still gets passed through CFIUS.

Ian Fliflet: [00:30:16] Yep. Yep. So, no that's nerve wracking in a deal, of course [laughs].

Delian: [00:30:20] The government can say, "No," you don't always love that in a deal [laughs].

Ian Fliflet: [00:30:23] Yeah, especially in this environment. Right? So you just never know. So that was, yeah, that was nerve wracking. Um, but, um, everything, uh, everything is, uh, well, that's all behind us now.

Delian: [00:30:33] And I guess another, like macro question is, you know, obviously RealNetworks hasn't, uh, you know, uh, you know, since let's say you left and like, you know, 2010 or so-

Ian Fliflet: [00:30:40] Yep.

Delian: [00:30:40] ... uh, you know, not been there, let's say like, you know, best performing company. I think most of that does partially come down to maybe, maybe a little bit of focus at a bunch of business lines or partially just timing, right? Like, you know, think Rhapsody, if it, it, uh, you know, coming out three or four years later, a little bit better user experience, a little bit more mobile adoption, the combination of all that would have made subscription more likely. I guess, what gives you confidence in like the, uh, you know, I'm sure you thought through the macro timing of OfferUp beta before heavily, you know, considering joining what gave you, let's say like confidence in like the macro, you know, timing of OfferUp versus let's say like RealNetworks.

Ian Fliflet: [00:31:10] Yeah. Um, I mean, to, to be totally transparent and give it that type of thinking, uh, I was at a point, I mean, I had just gotten married and, uh, it was 35 at the time. And I, um, I had no debt, um, the risk wasn't that great. And I wanted to take a career risk because I didn't want to look back in time and be whatever age I'm 40, almost 43 right now. I didn't want to look back and say, "I just, you know, work for a paycheck." And I, uh, so that was more of like a personal thing. Like, "Hey, give this thing a shot."

Uh, it w so I was gonna, I gave it a year in my mind, uh, what was also, uh, really excited about the, uh, business opportunity, because it combined these incredible metrics early on with something that was that I didn't experience it Real. Um, we were creating value for our customers in a way that changed their life materially. Um, and the positive stories that we get from our customers is still, is the most motivating thing about working at OfferUp today is that we help people and we help them in their lives. They make money, they find deals. Um, I mean, the, the degrees to which people depend on OfferUp are like, they need it for their daily existence to be able to find things, to buy and flip it to, like, I use it every once a year when I move or whatever.

But people feel good and they have these great stories. Um, whereas at Real, we were, we were creating software for things like music, streaming product, uh, watching video, um, you know, things like, things like that, that weren't really like life-changing for people. Um, the OfferUp is just inspiring and the customers are inspiring. So, um, it's, that's, what's not, was what wasn't even comparable. And I didn't really realize that until once I kind of, I started and started to see that. But, um, a lot of these, a lot of these things when we were in, if you're in tech for a long time, uh, a friend of mine, uh, um, had a quote, um, that was something along the lines of like, "All, everything that we're working on is like sand on a beach at the point in time.

It's right under your feet, it feels really important, but then you look back five, 10 years later, and you can barely remember what you're working on" [laughs]. So I kind of described some of the things I worked on it Real like that, like, they felt really important at the time, but in retrospect there weren't. I know for OfferUp, that's not the case because what I, uh, what I always remember is that these, the value that we're creating for people in these stories. So...

Delian: [00:33:40] That makes a ton of sense. So you've been at, um, OfferUp now for a little over seven years.

Ian Fliflet: [00:33:45] Hmm.

Delian: [00:33:45] Um, I think congrats on your seven years anniversary, literally this month [crosstalk 00:33:49] or last one.

Ian Fliflet: [00:33:50] Yeah.

Delian: [00:33:50] Um, and over the time, you know, it seems like they serve only increased scope responsibilities, seems like you have an even more sort of trusting close partnerships with the CEO. What do you think is like-

Ian Fliflet: [00:33:59] Yep.

Delian: [00:34:00] ... you know, led to that obviously instead of reintroduce bipartisan party early on since you joined very early. So you probably have at this point a ton of shared contacts, but what do you think has made it sort of a, you know, successful working relationship? I think a lot of early employees sort of dream to sort of be in position that you are [inaudible 00:34:13] company's now grown to, you know, massive scale 20 million, you know, monthly actives.

Ian Fliflet: [00:34:18] Yeah.

Delian: [00:34:18] Um, and, you know, still sort of, you know, I feel like a lot of times people sort of get, you know, layered away and, uh, are no longer as close to the CEO, you know, seven years in-

Ian Fliflet: [00:34:26] Yeah.

Delian: [00:34:26] ... versus it seems like you've been able to, you know, maintain that, uh, you know, sort of growing yourself while the company has grown. What do you think is sort of like, you know, led to that? Or how would you recommend other, let's say early States that have employees that are listening to this, they would like to be in a position that you're in seven years down the line. Uh, what do you think you did well?

Ian Fliflet: [00:34:42] Um, well, I mean, you got to find the right fit. It's like a relationship with, um, any type of relationship. And, uh, so, so early on, it was just, uh, "Okay, well, how can I help? How can I help this team?" So, uh, kind of like what I described earlier, it was a, it was a good combination of things that I brought to the table that, that weren't there. And then trying to figure out how to, um, how, just how I can show those types of contributions without just saying, "Give me that, give me that." Like, now let me, let me take a crack at it. Or, you know, if, if I saw, like, for example, on the fundraising side, you know, I'd say, "Hey, well here, let me take a crack at it. What do you think of this?"

Um, uh, so, you know, not taking something, but, um, making that kind of, uh, uh, kind of making it easy for, for Nick early on. Um, and then, you know, in the end, just the proof is in the pudding. So, uh, the reality was, uh, uh, I, um, happened on an opportunity to leverage my strengths, um, and we were growing really fast. And a lot of that was because of the, um, things I did to help accelerate that growth. A lot of other really smart people could have done the exact same thing. Um, but I happened upon an opportunity that leveraged my strengths. Um, but being, uh, you know, being, um, kind of, uh, when you're trying to develop a relationship with someone and you're trying to understand them and you're trying to help make sure that you're helping them in a way that they need help.

Um, so, uh, with, with Nick, I mean, I, I sat next to Nick, you know, once COVID hit, not any more, but I sat next to him every day for like six years. And we just happened to have a good combination of, uh, he's really good at things like, um, he's, he's, he's an incredibly motivating person to be around. Uh, he, I never see him go out the door and, um, I never think, "Oh, Nick's having a bad day." He's one of the most positive human beings I've ever been around in my life. Uh, he's amazingly creative. Uh, he can see things really well and when you, um, uh, show them to them and visualize them, I'm on the other side of things I'm analytical, practical, um, and measured. And he really respects that. And I really respect him so early on, we were able to create a really good, um, combination of kind of those two, uh, personality types, good combination of personality types, um, and then really develop a trust.

So, uh, for success for us at OfferUp, like it, it's all about a vulnerability based trust. So trusting each other to the point where you're very clear on what your weaknesses are. So, um, and, and asking for help. Um, no, it took a while for us to develop that and something we, and I mean, as a broader team are always working on, uh, but at the root of it, it's trust. Um, really deep trust to know that someone's, um, you know, um, gonna always do their best for it.

Delian: [00:37:40] You guys have a level of scale that you're at now. Um, how do you think about having a sort of, let's say incumbent competitor that, you know, provides maybe some level of platform risk, right? I'm not sure how much of your acquisitions today, you know, still come via Facebook in terms of, you know-

Ian Fliflet: [00:37:53] Yep.

Delian: [00:37:54] ... consumers coming in, but obviously Facebook Marketplace is now, you know, a relatively credible threat. I mean, I don't know the exact numbers or whether or not Facebook even releases it, but it does seem like they're sort of Facebook Marketplace is relatively active. How do you guys sort of think about that? Does it make you diversify your sort of acquisition streams as out of Facebook's that you don't have, you know, your main acquisition channel also being your main competitor? Um, how have you guys been sort of dealing with that?

Ian Fliflet: [00:38:17] Yeah. Um, well, first of all, it's, um, we've never believed, uh, commerce or local commerce is a zero sum game. Uh, that, that's our kind of our fundamental belief and it always has been, uh, because people can buy and sell on any type of platform and it all goes back to the success that they create. So, um, those dynamics are different depending on the city and it's kind of somewhere to let go. There's some markets where, you know, we're many, many times larger than Facebook Marketplace. Um, but then there's other markets where, you know, they're much, much larger than us.

Um, so we're always trying to do our best to create a differentiation in our experience that is, uh, solely focused around, uh, commerce, local commerce, and, uh, whereas our competitors, um, it's one of many things that they do. Uh, so they've created a great, a great experience and leverage their ubiquity in a way to grow really fast. Um, but it's something that they've done in parallel to OfferUp, um, not in place of OfferUp's growth or at the expense of OfferUp. We've got Google and Facebook. Um, so Facebook's are great partner of ours on the, on the marketing side and always has been.

Uh, and so, uh, you know, of course from a strategic standpoint, you're always thinking, what can I do to, uh, to, um, to diversify. And we're always testing, uh, you know, whether it's TikTok or Snap or Pinterest, we're testing everything. Uh, but the reality of a lot of it, uh, today is from a paid side you're, you're relying on Google and Facebook more than others. Luckily for OfferUp the lion's share of our new user funnel comes from word of mouth. Uh, way, way, way, way over half, um, comes from word of mouth. And that's just rooted in people having success on the platform. Uh, if we were, if we, if, if we were reliant on paid to grow, we wouldn't be here.

Delian: [00:40:16] Yeah. I know i, it's tough if that's your only channel. Um, so you've been in Seattle now, you know, for sort of, I believe in a sort of entire, let's say-

Ian Fliflet: [00:40:24] Yeah.

Delian: [00:40:24] ... like your career and obviously you went to school there as well. How do you think these sort of, like, let's say like, you know, tech ecosystem where the general, like Pacific Northwest, uh, tech ecosystem and sort of adopted changed over the past 20 years, where do you think it's headed vis-a-vis like, you know, Silicon Valley where it says, you know, are there some similar things where we both are experiencing somewhat of an exodus right now? Or do you think, uh, you know, there's actually, you know, differences in terms of where they're headed?

Ian Fliflet: [00:40:50] You know, I don't spend a lot of time in the Bay Area these days, so it's kind of hard for me to compare, but, um, you don't hear of an exodus out of Seattle. Um, like you, like you are in the Bay Area right now. Um, people in Seattle are, are definitely, um, uh, different. Um, but it kind of depends on, um, what that means. So people that grew up in Seattle like myself are definitely, uh, different, but there's a bunch of people who work in who work at the Amazons of the world and the Microsofts that aren't native to Seattle.

So they, they come here and they live here and, um, they, sometimes they have chosen to come here instead of the Bay Area, if they're in tech sometimes not. But, um, it's a very, it's a, it's a different vibe than, than, than the Bay Area. It's peop, people tend to stay at, uh, uh, companies a little bit longer. Um, there's, you don't get the, like, you don't get conversations about joining the hot startup. Um, it's much less startup oriented and it's much more oriented towards people who work at bigger companies and have, uh, um, kind of career paths that, uh, are more common, um, over a longer period of time.

Um, the, the, the, so it's kind of a hard thing for me to compare, to be honest, because I haven't spent enough time in the Bay Area, but that, that's, that's at a high level, um, that might not be helpful might not [laughs].

Delian: [00:42:14] And, you know, over the course of your career, you've sort of hopped around in terms of, let's say, you know, skillsets or functions, you know, everything from like marketing to Corp dev-

Ian Fliflet: [00:42:23] Yeah.

Delian: [00:42:23] ... to, um, you know, a variety of variety, different functions. And I'm curious how you think about sort of, um, honing in one particular skillset and being, you know, super, you know, how let's say deep, you need to go in before you start to like, hop around. Like, obviously for the first couple of years of your career, it was really a focus on business planning analysis, but then since then you've sort of started obviously build up like additional skillsets.

How did you think about sort of, you know, when you were sort of ready to take on new skillsets, how deep did you get into those? Like, did you feel like you needed to get world-class or just like, just good enough to recruit somebody world-class and be able to like, you know, uh, you know, manage and support and like, uh, assess them? How have you thought about sort of expanding your skill sets over time?

Ian Fliflet: [00:43:01] Yeah. Um, you know, um, I think people, there's the classic, like, look for people whose skill sets are T-shaped in terms of, uh, they can go broad, um, but are able to go really, really deep in one area. Um, my T is that I'm analytical by nature and that's the root of, of my, uh, skillset. That's been able to put me in the position in the different, um, uh, roles that I've been in and be successful and be analytical in that, in that role. Um, but then what the different skill sets enable you to do is get exposure to different parts of the business to kind of extend that T uh, more broadly.

So, um, whether, uh, so if I use my career, so I was an analyst early on, but then the Corp de, on the Corp dev side, I've got to actually start to be able to learn how to converse with people outside, um, outside of the, the company of RealNetworks. So, okay, how do I, um, how do I start to kind of sell RealNetworks to startups? So that was more of trying to learn how to position something, ex, position something to someone externally. Um, how do I present something in a way that's attractive to someone? How do I tell a story? Um, and when I got into the games business, uh, still analytical, but then how do I apply that to growing a business? How do I apply that to marketing, uh, along the way, of course, you're required to manage people and okay, you have to develop that people management skillset over time, um, and, you know, at, uh, OfferUp, it was just kind of expanding on those things even, even further.

Uh, but still at the root of it was being analytical and thoughtful in terms of how I make decisions and create opinions. Um, but further developing my T in terms of taking on things like I took on early on, I took on, uh, our communications group, um, jumping into that, still analyzing things, but, um, trying to figure out how to be able to communicate with the people who, um, are in the comms world. Um, uh, building out orgs, I build out our finance org for the first, you know, five years or so.

Okay. What do I do there? How do I analyze this and position this? So early on, we actually use that T, um, uh, T type of, uh, of, um, uh, per like personality type or skillset type when we were looking to bring people into a startup.I think that's really important because he, people who are really good at certain things, um, but who can also interact, uh, along the, kind of the, the spectrum of the different business needs that you would see.

Delian: [00:45:36] Maybe it's like a final question you, uh, uh, you know, wrapped up your, your, uh, university time, uh, in the midst of a sort of, you know, crazy time in tech, uh, I, the tech crash, uh, now 20 years later, we're also in the midst of a crazy time in tech that somewhat flipped the, the world's crashing around us while tech at, it seems like, you know, offer up is included in that, uh, is rocket, rocket shipping upwards.

Ian Fliflet: [00:45:56] Yeah.

Delian: [00:45:56] Um, I guess, you know, if there's somebody on the podcast is listening, that was similarly, let's say graduating today in 2020 with a, you know, BA of business from University of Washington, what do you think it would be like, you know, sort of your suggestions or career advice, sort of, where would you point them towards the areas that you think are most exciting? Like, would you tell them to join a larger company like you did from the get go at either sort of, or junior stage grow your skillset from within there? Would you be diving into startup straight away? What would be your, you know, I don't know, feedback, direction, advice that you give them?

Ian Fliflet: [00:46:25] Yeah. Uh, I mean, I owe all my success and my opportunities to the managers that I worked for and people that gave me the opportunity to, uh, learn, fail, uh, and get more responsibility than I deserved [laughs]... at any given point in time. So, uh, my feedback would be to look for an opportunity where you see someone who is there and who's going to help you along the way, whether that's a sponsor or a mentor or a manager, because it really comes down to that, um, that person early on in your career who helps put you in positions to be successful. Um, and who's willing to take the time to give you opportunities, give you feedback and help you develop. If you can do that at a big company, you can do that at a small company. Um, but really that's what it's, um, that's what I think it's all about in terms of early career development is having someone who's out there who's looking out for you.

Delian: [00:47:17] Like that, like that, finding the mentor. Well, uh, Ian, thanks so much for taking the time to be on the podcast today. I really, really appreciate it.

Ian Fliflet: [00:47:23] Yeah, thank you Delian.

Delian: [00:47:24] Thanks for listening everyone. If you'd like to support the podcast, please sign up for a paid substack subscription, which we use to pay for transcripts, mics and other improvements. If you have any comments or feedback on what kinds of questions I should ask, who should come on the show or anything else, please do let me know. Have a great rest of your day.