INTERVIEW | Make Money by Removing Friction and Scaling with Empathy, feat. Chris Kaufman

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What's going on everybody? Welcome back to the Travis Makes Money podcast where it's a mission to help you make more money.

Today on the show, I'm talking to my new friend, Chris Kaufman.

Chris is a Detroit based creative leader, entrepreneur investor and author as co-founder and former chief creative officer

over at StockX.

He helps scale the marketplace to a $3.8 billion.

That's billion with a B, $3.8 billion valuation serving customers in 200 plus countries, which I don't know if you know how many countries are in the world, but that's like all of them.

So 200 plus countries and territories in 2020 StockX reported $1.8 billion in GMB and $7.5 million plus trades.

Chris, the best selling author of empathy at work and advises and invests in early stage companies.

This work plans brand-building culture design and practical empathy to help leaders build high trust, high performance teams.

Chris, what's up, dude? Welcome to the show.

Hey Travis, good to be here.

So you are an entrepreneur through and through and now you are an investor and really advisor.

Somebody who breathes the entrepreneur, spirit and helps other people do the same.

Where did this start for you?

What was the first time you ever made a dollar that I got you really excited?

So the very first time was when I got a paper route when I was 10 and a couple of things about paper and obviously the paper routes are not what they used to be.

But for me, it was really one of the first places where I had to learn serious time management, had to learn some discipline.

Because you go to school all day and then you get home and there's a stack of papers on the porch.

They're not assembled, right?

Like you got a symbol and you got a pack of them, you got a bag of them.

And then you got to get them in saddle bags on your bike and go around the neighborhood and deliver them.

And then at the end of the month, you go around the neighborhood and you knock on every door and you collect $3 for the paper.

That's what it was back then for the month.

But a couple of things you learn is one, suddenly like you're the only 10 year old in the neighborhood who has money.

Which is kind of a fun spot to be in because then you can start buying things.

And when you're 10, you know, buying baseball equipment and football equipment and stuff that 10 year olds wanted.

But it was the first time that I really learned how much work goes into making a dollar.

When you're delivering a newspaper all month and it's $3 per house,

you're certainly not getting that whole $3 or that's part of that goes to the publisher and they got to cover their costs.

I mean, you're probably walking away with a dollar of that.

It won't you learn how much labor goes into that over the course of a month, whether that is in this outside of Detroit.

So whether it was 12 inches of snow on the ground in the middle of January or 95 degrees in the middle of July or August,

you had to get out there and deliver the papers and then come into the month.

You realize how hard it is to collect $3 from people and you really start to appreciate what goes into it.

And you know, people see you out there.

They wouldn't answer the door.

You'd have to come back multiple times.

But it was also probably the first time that I had a moment that was like there has to be a better way to make money than this.

Because it was a lot of work for not a ton of money.

Yeah, you know what, that's the first taste of freedom, the first taste to make a little bit of money when you start looking at what you did to make the money.

That's exactly what happened with me, man.

I was like, I was doing landscaping as a teenager and that was the same thing.

It's like you put in all this, this, this labor, these actual manual labor hours and then you look at how much money that you made.

And it's like, God, it's got to be, I got a better way to do this.

It seems like, it seems like all these people that have a bunch of money aren't out here like mowing lawns every day like I am.

So there's probably a better way to do this.

Did you, did you feel like you caught that entrepreneurship bug at that point or were you kind of heading toward a traditional career path, you know, high school college age?

I mean, I probably started to catch a little bit of the itch at that point.

I, you know, I did that for a few years and at 10, you're not necessarily thinking about scalability of revenue and things like that.

But, but there is a part of it where you kind of start to look at other people making money and how they're making money and, you know, what is scalable and, you know, what's that thing that you can do where you're going to make money in your sleep.

And, you know, over time, you kind of start to think about that. I think one, one moment where I kind of had that first, like, aha moment around entrepreneurship, starting a business, not necessarily scaling something, but like having really significant upside on something was in high school.

And I, I will preface this with, I was not the kind of kid who would ever have a fake ID like I was in art club and physics club and one of the editors of the school paper.

I was like working on a school paper until like seven o'clock at night and all kinds of other things, but there were a lot of kids that I went to high school with that were the kind of kids who wanted fake IDs.

And, you know, this was mid-90s. There weren't a lot of kids who had a copy of Photoshop. And there certainly weren't a lot of, you know, 14, 15, six year or 16 year olds who were good at it.

But I was and other kids figured this out, especially as I was doing things, you know, like the school newspaper and, you know, working on computer graphics and art class.

It, it came to someone's head that was like, hey, could you like put my face on an ID? I was like, sure, like, that's true.

For what?

Yeah, I went on into this thing, which was like, I couldn't, I can make these IDs. I can charge people for that. I mean, it was back when it was just a laminated card.

So I had like the, you know, gateway 2000 computer and the Epson inkjet printer and a refurbished laminated and I was making these kids at high school ideas for 50 bucks a pop.

And it probably took me 10 minutes to make one. And I think that was the first moment where I was like, this probably isn't a long term sustainable business, but there are better ways to make money than delivering, you know, papers and sweltering.

So heat or a frigid cold.

Yeah, yeah. So so high school age still hustling. Still always got something that you're working on. What did that translate to post high school?

Well, you know, then I went to undergrad and I for business or entrepreneurship or.

No, so I, I did my bachelor's degree in fine art.

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I'm interested in art and design and I think in the 90s when you know it was like this perfect

storm of the intersection of fine and conceptual art with the rise of the computer and computer

graphics and it was these two things that I fell in love with that I could really like meld

together and I was just super interested in that. I went on that path and originally thought that

I might go into advertising or something and then decided that that wasn't for me. But like having

like the entrepreneurial itch in college there was you know there was even a part of me that was

you know like when I made projects I was making them for like through the lens of how does this

apply to business how you know is this scalable does this have like commercially applicable

use like I think I was thinking about these things from a different angle than you know some of

the other people who were just kind of in the art school to become artists. I really started

thinking about how art and business and design intersected a relatively early age and more

importantly started thinking about how can you use design as a business discipline to solve problems

create businesses drive revenue and ultimately build teams and create products that customers are

interested in using and design is such a big part of that. So in uh after undergrad where did

you get a job like bridge bridge bridge the gap for us between college and stock X.

So in college a you know like I worked pretty much full time through college I did a lot of freelance

work a lot of you know picked up design projects and then while I was finishing college I landed

an internship at quick and loans and I was supposed to be working on like UI UX research projects

kind of facilitating focus groups doing one one interviews and what happened pretty early on was

I was facilitating some of those interviews sitting in on some of them

observing taking notes kind of hearing about where customers were getting stock challenges

they were having things that they were encountering in the mortgage industry that they absolutely hated.

And this was 2006 so the iPhone did not exist yet there's no such thing as apps really

but like some of these processes were starting to come online and you know quick and was

a pioneer with that is you know something that Dan Gilbert thought really passionate about pretty early

but I would go through these user tests and instead of just taking notes and saying yeah these

are things people are struggling with I would go back to the computer and I would create a design mock-up

that solves some of the problems I you know I might look at one of our landing pages or our emails

and say okay like we heard this feedback what if we change these things what if we move these

buttons what if we made this flow more clear and it wasn't long before someone on the marketing

team there said wait a minute would you rather just do like product design stuff like work

on the website and the landing pages and the emails and the blog and all these other things

we could use more help there and you seem to understand that side of the business so

long story short I hired on as interactive design director right out of my internship had just

finished undergrad and you know that was a place that give Dan a lot of credit especially in the

early days like very nimble very entrepreneurial spirit people had a lot of autonomy they could

take risk and what happened was I was working on a project with a couple other people internally

that was called Quizzle and it was essentially we created this credit report score or financial

management tool basically to get people mortgage ready because we were throwing away a lot of mortgage

leads because people's DTI was slightly off their credit score I needed to improve by a couple

points and instead of throwing those leads away we decided like what if we could incubate these

people some of these people are like three points away on a credit score from qualifying you know

let's let's give them some pointers let's help them consolidate debt get them mortgage ready

so we we end up spinning that out into its own companies you know stayed within the quick and

family of companies did that for a few years and that ultimately got acquired by bank rate

I ended up doing the agency thing after that for about 11 months and I confirmed my suspicions

was not built for the agency world I you know I didn't really want to do client work on that level

I love doing client work now because I get to pick clients that I actually love the work they're

doing and I like working with them are way more personal process but you know something about like

big agency client work was not for me which then led to starting a another business called up to

that essentially it was an idea around creating a social calendar for iPhone and Android

you know at the time everything in the social landscape was either past tense or present tense so

you were you know you're on Facebook you're on guwala you're on four square if you were talking

about the things that you were doing right now or the things that you already did but there was no

future tense social platform to plan the things that you wanted to do with your friends

so you know our idea was something future looking you talk about the things that you'd be doing

tomorrow this weekend next week and you could actually make plans around that and you know we did

that for four or four and a half years got up to a couple million active users never really

hit a point of saturation but you know Dan was our biggest investor in that too and yeah and

you know like he kind of stuck with the things that we were building over the years which was

yeah super cool and you know he knew these teams well and I think he had a lot of trust and

you know what we were doing from a team perspective we didn't always have the product idea figured

out like things like that yeah so I would say like team is so important but yeah long story short

we got to a point where growth had plateaued we started shopping the business around we you know

talked to a bunch of the big tech companies you know looking for an acquisition situation and

ultimately Yahoo made us an offer to acquire the company we were ready to move to the west coast

and a couple days before that deal was supposed to close Dan asked to meet with us and he basically

said hey the Yahoo deal isn't sitting right with me you're Detroit guys you told me you always wanted

to be here creating jobs building businesses helping rebuite all as the city how the heck are you

going to do that in California we said well we're not but Silicon Valley acquisition looks pretty good

on a resume and we're kind of out of money and we got bills to pay and he said you know what like

tell Yahoo the deal is off show up here Monday morning you guys can have a few desks

outside my office and you can start working on something else you build it I'll fund it

and during that conversation which you know well we were back to back to back startups at this point

all of us yeah we didn't necessarily have another startup idea you know Dan mentioned this idea

about like what if you applied stock market mechanics to a secondary retail market it was a we

have no idea what that means yeah yeah can you say that I mean yes yeah oh idea like that's all I've

got but I think you guys can figure it out and for some crazy reason we bailed on Yahoo we showed up

that Monday morning and started working on what eventually became stock X no way that's crazy dude

I mean props props to somebody like Dan dude I mean like that speaks volumes for like the type

of leader that that that he was to be able to just continually and like even even though it wasn't

like a direct benefit to his core business you know what I mean just to seems like some like

somebody you want to get around which is I think when when when when younger people because we

have a lot of younger people listen to show ask for advice around like well what should I start

doing how should I start making money and it's like I tend to push back against this idea of like

really really early entrepreneurship anymore the more that I've been around a lot of other people

because of stories like this because I hear like could you have just like gone out as a 22-year-old

and started a company and could it have been successful yes I'm not pretending like that is a

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Bell says dime while they were paying you to learn from them in a exponential way is is so much more

valuable in your 20s than it would than it is sometimes to just go start your own thing

and I think it's wildly underrated because of the glorification of entrepreneurship that's happened

in the last couple of decades but I also just I love that story for so many reasons and that's

one of them to me is that you were able to like just get aligned with somebody who was really smart

guy making a lot of big moves already really successful and then saw something and you guys

enough to be able to just say I just want you to work with me I want you to continue working with

doesn't matter like money's off the table whatever it takes like here's an idea run with it

and then it actually turns into this you know four billion dollar company so so at the time when

you started it what did it was was collectibles sort of on the horizon like what were you thinking

in terms of what's our what's our like first go to market on this so we looked at all kinds of

things that sold for a premium on the secondary market and now these are products that people are

passionate about they're made in somewhat limited supply they have high demand they sell out

quickly and then you have the price premium that comes with that so we were looking at anything that

these stock market mechanics could be applied to and and by stock market mechanics I mean

transparency anonymity and authenticity when you buy a share of stock on any of the trading platforms

you have no doubt that it's real you have no idea who you're buying it from and you know exactly

what the last person paid for so you can make intelligent buying and selling decisions

and we wanted products where these same core tenets could apply to so

start ended up starting with sneakers and the biggest reason we started with sneakers was because

very early on we discovered that about 70% of sneakers on the secondary market were brand new

in the box which meant we could go after 70% of that market we didn't have to worry about selling

you shoes we didn't have to worry about doing condition grading and most importantly if you had

only brand new products that meant you only had to have one product page for everything one set of

photos one description right people didn't have to do like they were doing on eBay and write a

description they didn't have to take photos they literally just had to come on stock X create an

account and click a cell button and say I have this I'm going to sell it for whatever the current

bid is and the transaction would complete and that that was a really powerful part of the platform

yeah the removal of friction yeah and I think you know like looking forward to getting to the

point where we did we did collectibles there there were some missteps in my opinion so we went

from doing sneakers to going into watches and bags and and then we got into streetwear after that

if I if we had to do over I think we would absolutely start with sneakers go super deep on sneakers

instead of you know trying to go wide as early as we did and then the next vertical 100%

should have been streetwear same customer base tons of overlap you're marketing to the same

demographic you're just you know you're you're saving and expediting so much time and resources

and you know pulling from the same knowledge base there and then I think we should have went into

collectibles because there's a lot of overlap there especially you know with supreme and bear

brick and some of those things it and then maybe considered some of the other things but we we had

this like super passionate user base and customer base yeah they were already into sneakers most

of them were already into streetwear and many of them were all into collectibles and I think like

we should have just went after those big three categories right away and got really good at them

before we did anything else yeah yeah and I'm the you know hindsight's always 2020 but I think

you guys did a pretty good job of figuring it out I'm curious I'm curious on the sort of the

alchemy here like what what year was this that you launched the initial version of the platform

first version launched in 2016 okay okay so we started working on it early 2015 it took us

about 11 months to build okay so do you view the because you know two like a decade or two

decades before some somewhere in there the timing might not have been super great because I felt

like there was sort of like a lull culturally in in the collectibles space it was like it was

really big in like you know the 80s or whatever and then there was sort of like a drop in interest

and then the last decade decade and a half it's it's it's exploded more do you view stock X as like

being one of the reasons for that just because of the the the barrier the barrier of like finding them

or getting involved became easier because of your platform or do you view that as like this this

industry was sort of taking off already and we just provided a solution and we sort of piggybacked

on the tidal wave of the collectible space again I think that is probably more accurate now

we were a vehicle that I think we probably expedited some of what was happening anyway because

we were giving people a tool that one gave them access it democratized some of this market

it it allowed things to move a little more quickly in the direction that they were probably going

in anyway but the timing was really important because right all industries and markets they

have been flow their cyclical what happened with the collectibles markets and trading cards

especially was like you said you you had this huge movement in the 80s you had a ton of activity

there were a lot of things on the market but something that we never really knew was how much

of certain things were on the market especially trading cards you know I think we always assumed

that there were far fewer of almost everything than there really were yeah and and the internet

didn't exist to essentially bring transparency to this so you know if I had a Ken Griffey Jr.

rookie card I assumed that I was the only person in the world that had a Ken Griffey Jr.

rookie card because I was the only person in my neighborhood that had one you go to a local

trading card show you may see a couple it wasn't a ton and then all of the sudden the internet is

out there and the Beckett guide is online and eBay pops up and you know all these things are

happening in the 90s and people start realizing like there are tens of thousands if not hundreds of

thousands of some of these things that we thought there were only 10 of yeah and that has a really

detrimental impact not only on a market like that but on a culture like that because

losing that scarcity takes away a lot of the desirability of those products so you know fast forward

to a point where sockets comes in these markets have leveled out and now the internet has started

doing the opposite where in the beginning it was really revealing that there really wasn't as much

scarcity in some of these products as we thought now especially with sneakers we're finding

some of these products are a lot more rare than we realized and with some of these things

they have you know one they have a limited life and two there are products that are constantly coming

out of the market from a dead stock or new in the box perspective so say you have 50,000 pairs

of shoes just floating out there that are brand new in the box and they you know they have this

value value and desirability that people are looking for well the second somebody puts one of

those pairs of shoes on their feet that's one fewer pair of those shoes that are in the market

and that's happening all the time and if Nike or Adidas or another manufacturer isn't constantly

restocking these things which typically they're not the inventory is going to go down the value is

going to go up and with something like stock acts you're actually tracking these things you can

actually see the sales volume you can see what they're selling for you can get a pretty accurate

idea of how many of these products are actually floating around in the world yeah yeah and because I

wish we had a lot more time here because this conversation is fascinating to me but I want to

be respectful of your time here I know you just came out with a book recently Empathy at Work

can you give us just a 30 second you know overview of this working people go get that and then we'll

get out of here yeah so you know it is really a culmination of things that I learned over the

course of my career things I learned in one of my grad programs I did a master science and learning

and work change at Northwestern and you know through that I started looking at all of these

concepts models frameworks you know anecdotal things over the course of my career and thought

gosh like leading with Empathy is a really powerful tool and I think there's evidence that

supports that you know not only is it good for morale but it leads to improved innovation

increase increased creativity it reduces attrition it's good for a long term sustainability

of the business so the idea was kind of put together a guidebook that you know brand new leaders

could learn from CEOs entrepreneurs you know really use it as a tool to think about Azure

building teams Azure creating team dynamics you know as you're figuring out what those mission

vision and values are you can really use this as a companion guide to figure out some of those

things and also uses a guidebook to decide what kind of leader you want to be we've heard it you've

heard it from Chris specifically on the show of how many things that he's touched in his career the

success to be able to achieve so Empathy at work go pick up a copy of his book as soon as you

possibly can Chris appreciate you taking the time I know you're a busy guy don't take that for granted

everybody else listening remember money only solves your money problems but it's easy to solve

the rest of problems with money in the bank so let's solve that one first here on the Travis

makes money podcast thanks for tuning in catch guys next time peace ever seen a musical so good you

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