Made It with Connor Tomkies

[00:00:00] Gil Eyal: We, we, we got to our own downfall by signing Lil Wayne and Leonardo DiCaprio and other big, big celebrities to content on our platform and basically crash every single time we did. So we killed our business by being naive and thinking that we could do it.

[00:00:15] Narrator: Hey, co founders, welcome to Made It With Connor Tompkins, a podcast where we meet with badass entrepreneurs who've succeeded.

their companies, discussing everything from the wins and losses of entrepreneurship to the next steps after the exit to not miss out on these exciting stories. Be sure to subscribe wherever you get podcast. Let's dive in

[00:00:39] Connor Tomkies: everyone. I'm here with Gil Eyal, he is a fantastic serial entrepreneur. He's also the founder of Hyper.

We're going to be talking about a lot of different stuff, influencer marketing, what it's like to grow a company and, uh, how it is to structure some of these influencer deals because he had a really cool exit with some caveats that we're about to get into. So, hey, Gil, good to have you.

[00:01:00] Gil Eyal: Thanks for having me excited to be here.

[00:01:01] Connor Tomkies: I want to talk to you a little bit about what it's like on the post exit side of selling your business. But I also want to talk a little bit about. What is hyper and how are you getting involved in influencer marketing when it was on the rise? So what was that that process like how did it how did it start?

[00:01:16] Gil Eyal: I was working for a startup that was supposed to be Instagram before Instagram had existed This idea of photo and video sharing on mobile devices we thought that directly thought that mobile devices would be a paradigm shift in that similar to Facebook and Twitter at the time where people would want to be sharing phonos and videos You We kind of overshot.

We tried to make a solution. The, um, Sharon's videos on the BlackBerry very, very early and clearly didn't work. Um, but, um, our marketing worked really, really well, similar to what was in that festival, the fire festival, we had really good marketing, but a product that didn't work. People were stranded

[00:01:55] Connor Tomkies: in port a potties on island with your product or?

[00:01:57] Gil Eyal: No, but, but they couldn't reach the celebrity content that we promised them. So it was kind of same, same level of disappointment. Um, but. The idea behind it was that, um, we could leverage the fact that celebrities have been the driving factor for traffic at the time for Twitter and Facebook. If you remember at the time people were saying things like, 3 percent of Twitter traffic is, uh, goes to Justin Bieber and stuff like that.

But those companies were going public. They just announced that they were going public and not sharing any of the revenue with the celebrities. So our angle was, Let's tell them that we're going to be the next big social network and that they could get some equity and partners in our company. So we just couldn't deliver on this promise.

Uh, it worked in small scale. Amazingly, the engagement was amazing. People wanted to use it. Um, and then we, we, we got to our own downfall by signing Little Wayne and Leonardo DiCaprio and other big, big celebrities to create content on our platform and basically crash every single time they did. But the concept was we basically looked for these celebrities and pitched them this idea that, Hey, you can be a shareholder in this company.

We can't pay you. We didn't have that much money. Um, create content that'll drive a lot of traffic. And at the time Ashton Kutcher was probably the only real celebrity doing tech deals. Everybody felt like they should do this. It was a perfect storm, Facebook and Twitter going public, them feeling like they were screwed over.

And, uh, this concept that made a lot of sense to anyone listening to it. It was just too early. And obviously, you know, you know, the end of the story, Instagram won that race, but for a little, very, very short while we called ourselves a real competitor to Instagram,

[00:03:33] Connor Tomkies: safe to say that Lil Wayne and Tobey Maguire killed your business.

[00:03:36] Gil Eyal: Yes and no. Actually, I think we wouldn't have had a business without Toby and, um, Leonardo DiCaprio and Serena Williams and Adam, uh, Levine and a bunch of other people that were on the platform and Kevin Hart. It was a big, big contributor to the platform. We got a lot of these celebrities. We got pretty good at like having them tell us when they're going to post and then getting ready to crash and like fixing it on the fly and everything.

But it just wasn't really scalable. Did they kill the business? No. Instagram performed way better than us on a lot of other things, but did they help? No. And they drove us, you know, 20, 30 million users that can use the platform. So we killed our business by being naive and thinking that we could do it. I don't want to click them.

There were, uh, A gif that my entire career has been built on.

[00:04:19] Connor Tomkies: Leonardo DiCaprio, we appreciate you and we don't mean anything by it. This is Mobley media, by the way. Right? So this is like 2010, 2012 timeframe.

[00:04:29] Gil Eyal: Very early, the company suffered from a bunch of other issues with management and other things, but I had a very good relationship with the investors.

At some point, it was clear this isn't going to go, or at least it was clear to me it wasn't going anywhere. And the founders still thought it was. So we parted ways, um, amicably, but the investor said to me, Hey, we'll give you some money. Go build something. You should be a film. And honestly, until that point, I never thought I would be the number one guy in the company.

It wasn't something that drove me. I enjoyed being the wingman. I was the guy setting up my friends on dates. Um, I dunno, just loved that position and pretty much everything in life. And it was great, but the, suddenly somebody offered me half a million dollars to go start my own company. Um, and it just so happened that I'd been at the pinnacle of watching social media influencers come to life.

Before that, there was no such thing. You weren't allowed to promote products on Facebook. I'll remind you that you would get kicked off of Facebook for a month. If you promote it, if you put it, promote it, you put promoted content on your Facebook page. So the world was shifting, but you were seeing these influential people become influential on social networks.

And you saw all these brands that couldn't do what we were doing. At Mobley, they wanted a lot of celebrities, but they couldn't afford them and celebrities are becoming smarter after it was clear that Mobley is not going to give them the return that they wanted. Other companies that were doing similar things were struggling to do that.

Uh, that I said, okay, there are all these influential people. Everybody's trying to work with them, but I think that there's going to be an influx of these people. They're going to be a commodity. So I'm going to build a company that isn't about working with celebrities. It's about working with these smaller influencers very early on.

That's kind of, that's kind of where the industry ended up going, but it required a very different thought. My thought was okay, data. How do I analyze, how do I understand who influences what? Which audience says, and that required to be, to be a data player in a world where everybody was a broker.

[00:06:22] Connor Tomkies: Did you have API access?

How did you get in there?

[00:06:24] Gil Eyal: Social networks were super excited to work with us. Um, everybody wanted influencers. They wanted us to drive influencers. They want us to help them build a business model around influencers. So they wanted us to build tools for advertised users. They were throwing data at us.

That shifted after Cambridge Analytica, and that was a major inflection point for our business. Right. From a world where they were generously offering us their data, um, for, for a fee or for free, or by looking, you know, but just saying, fine, do it. We're not, we're not worried about that.

[00:06:55] Connor Tomkies: A little bit around timeline.

So, um, you started this company in 2013 and then Cambridge Analytica. When did that strike?

[00:07:05] Gil Eyal: I don't remember the exact date. I would think it's around 2016,

[00:07:09] Connor Tomkies: if I have to guess,

[00:07:10] Gil Eyal: maybe,

[00:07:11] Connor Tomkies: maybe a little later. Did you see that? And you were like, um, And, and you knew what the impact might be whenever it hit the news, or was it a little bit of like a slow burn to like an option where it was like, um, we're seeing some backlash and you're thinking it might go in that direction.

[00:07:27] Gil Eyal: Look at the pie. We're extremely generous with data. Very, very, uh, proud of their social graph and they allowed us to build companies based on that, uh, availability. And then one day they, they, they changed it. So in the back of my mind, it was very clear to me that. If I couldn't make sense for them, if my business wasn't making money for Facebook and for the social networks, at some point they might shift.

So I had built a business that was originally planned on getting marketers to activate influencers and then put marketing budget behind that content to sell on social networks. It was looking back naive because. Um, the Cambridge Analytica thing had nothing to do with, and everything the social networks had told us until then was that's what they want us to build.

That was naive because the Cambridge Analytica kind of shifted the cards and it made us shift what we had to offer along and create a product that wasn't as significantly data driven. We were suddenly much more limited in how much data we can offer. Um, but concurrently, um, we also had to deal with competitors who are copying our business, who are living in regimes that they couldn't care less about.

What Facebook wanted that to do with their data. So people in different countries where there's no way to actually for Facebook to go after them, we're continuing to offer now a better product than ours, um, for a lower price, because they didn't have to pay the employees we were paying, uh, without the risk of getting sued by Facebook or worrying about venture capital refusing to invest.

So our entire business model had shifted very quickly. We were still, you know, in a SaaS business with a healthy margin and we're doing pretty well. But that led to, um, investment rounds, uh, being less attractive, potentially having to do a down run because suddenly the valuation, our growth wasn't as quick what we had to offer.

Our retention rates weren't the same. So it became a place where, you know, you build a company to almost 10 million in ARR, which is kind of like the holy grail of ARR, like, you know, it's kind of like the, the, the, the cast. Now the big boys want to look at, you know, that's kind of what we were told at the time.

They had back in the day, at the day, they had something called Um, the napkin that, you know, started somewhere in the SAS napkin told you what your valuation should be, right? And it said like zero to a hundred K your, your seed to pre seed, and you can get up to 5 million or whatever it is. And if you're in the valley, maybe you'll get eight.

Um, and if you're at 1 million, you're this. And if you're at 10 million, you're this. And those are kind of the stages, like after 10 million, it literally would say you made it. Like from here, you know, the, the, the, it's the other way around. It's not a one in 10. It's one in 10 fails. Like you're at this point.

You're going to make money on this, but you know, that didn't take into account Cambridge Analytica and events like that and Facebook threatening to sue everybody in the space, uh, kind of blanket, uh, threat that scares away every investor possible, um, no led me to start looking for an acquisition, which we eventually found, um, but that was the whole ride, you know, we, we, we had investment rounds fall through because of that stuff.

We had a public company that was going to acquire us and then their stock crashed and it was a, it was a whole roller coaster. Which led me to realize that, wait a second, I don't necessarily have to be the number one guy. There's a lot of stress there. I don't love being the number one guy. Um, can I add on to that, that because of that situation, we'd have to take money in various forms.

And I ended up owning a very small percentage of the company, you know, several points of equity. Um, so even when you sell companies for, you know, several tens of millions of dollars, you end up making what for me was the first time we had had some real money. It always should, it never didn't come from a very wealthy family.

We weren't poor, but we never had, you know, millions of dollars at the bank. Suddenly I had, you know, seven digits of the bank for the first time in my life. And I decided I wanted to not be number one.

[00:11:13] Connor Tomkies: Around the 10 million being a little bit of a marker or a barrier. Like I remember bankers and brokers being a lot more interested after that 10 million mark.

Um, and you get a better multiple and it's a different set of buyers. So that makes sense. A hundred percent. Um, what was that process like of finding the right buyer? Because I think you sold to Julius. And Julius is still around, right?

[00:11:37] Gil Eyal: We actually had like a two state sale. We sold to Julius and then we immediately sold it to Triller.

Um, and the idea was that Triller was ready to go public. Um, at the time, uh, Triller was supposed to be like this new media company. They were kind of competing with TikTok, competing with, um, YouTube and. Um, they, they have their arms in a lot of businesses and influencer marketing was a very, very big component of what they wanted to do.

And we said, okay, if they can build this big social network, our data tools and our, um, activation tools would be the perfect solution. They wouldn't have to build. Um, so it was a great deal, uh, part cash, part equity, the equity part, we'll still see what happens. Um, but they were supposed to go public. And, uh, you know, what happens is that even though you have all these safeguards in place, you don't really have any control once you've solved it though.

[00:12:23] Connor Tomkies: That's true.

[00:12:24] Gil Eyal: Um, and so. We're waiting to see what they're able to produce, but we're really, at this point, I'm completely removed from the company.

[00:12:31] Connor Tomkies: Well, weird place to be in, right? Where you're like, uh, the number one cheerleader, but you're, you're like, let's go guys and hoping for the best at some time in the future that, that might, that might pay off.

[00:12:42] Gil Eyal: Yeah. I try to be, I try to be the cheerleader in places where I can actually bring value and I think they're, um, the space to me personally, just not exciting to be a part of, so I'm happy that I didn't have to stay on. I wish it had turned out better. And part of it had to just deal with the market dropping and unforeseeing.

[00:12:59] Connor Tomkies: I like the idea that you guys were leaning into with Mobley and with hyper around, um, getting celebrities to buy into the company, like we don't have cash, but we're going to give you equity and then you're going to help us grow and scale. How would you structure one of those agreements today? Like, let's say that you have a brand that is, is an e commerce brand. Um, then the clothing vertical. Like how would you structure that type of deal?

[00:13:26] Gil Eyal: So that's what we do as starters. So the one thing that we almost got through, but now what I do is my brother and I started our own little, uh, really an angel and we don't manage anybody's money.

We invite people to join us while we make an investment, but we primarily, we just write our own check. And then, you know, if we end up raising another 50 from someone else, great. If we end up raising another 500, even better, but the deals vary. But what we do is we'll look for companies where a celebrity really makes sense.

And the truth is, 9 people listening, if you're a sounder, it probably doesn't make sense for you. It doesn't make sense if you're B2B most of the time, it doesn't make sense. Um, if you're SaaS, it makes sense if you're a consumer company where your product is so good that people don't believe it's that good.

Um, and that's what we look for typically. I think that's where we will invest in. I'll give, you know, an example, you know, we invest in a company called Goodall's. Oh, which was a healthier Mac and cheese. And I remember meeting the founder. One really great part about it is her name is Jennifer Aziza. And I was like, her name is Gen Z.

And she's selling a product for Gen Z. I mean, some, if I were a spiritual person, maybe I'd say that's a sign. I'm not very spiritual, but I liked her. But in the back of my mind, I was like, Oh, healthy Mac and cheese. That probably tastes really bad. Um, and then she sent it to me and I gave it to my kids and they went nuts for it.

It was so good that we don't, you know, we don't eat Kraft anymore. But it was still, you know, a founder with a healthy mac and cheese. How are you going to get there? And she wanted a celebrity. And we talked about who should that be? And we were very thoughtful about who it could be. And we ended up with a few people, most of them playing superheroes on TV.

And the reason was because this is a product you have to sell to people that won't believe you that it does what it says it does, you know, the kids won't believe you that it tastes good, right? Because mommy bought it. And if mommy bought it, then, you know, it probably sucks. It's And the mommies won't believe that it's good for you because the kids want it.

So you kind of have a lose lose situation with these types of products that only someone that boasts of the kid that can actually speak in two tongues can put on the wonder woman costume and be exciting for kids, but that could show her kids and show that she's feeling it and be exciting to women, um, into moms.

And, uh, you know, we had her in like 50 other candidates knowing that she's probably going to say no, that she was a number one choice. Miraculously in that deal, she said, yes, that happens rarely, but we had nothing. You're currently raised 2 million in total from friends and family and some angels like me.

Um, but we had a founder that was extremely charismatic. We had a vision, we had a product that tasted really good. And we had a celebrity that had been caught on camera saying, but she misses eating mac and cheese ever since she's an adult. How

[00:16:09] Connor Tomkies: do you structure this type of engagement? Because there's not, uh, like, Kind of like a cash element up front.

Is it more like, Hey, like you're going to be a partner inside this business, but if you don't mind, can you post a certain number of times or the cash element was the other way around. We made her an investor,

[00:16:27] Gil Eyal: not a huge investor, obviously, but money that for someone who makes 20 million a film, wasn't very significant money, um, and showed some skin in the game.

Um, And the pitch wasn't, we need you to post every once in a while. The pitch was actually a little different. It was, we need you to come on sales calls with buyers in retail. And the reason we wanted, um, her to come on sales calls with buyers in retail was because We wanted her to be able to say, Hey, I want to post, Hey, go get Goodall's at Target.

But I'm obviously only going to do that if there's Goodall's in every single target. The last thing I want is for someone to go into Target looking for Goodall's and find out that you don't carry it. Um, and what that changes the dynamic in that business from, Hey, we'll give you 50 stores as a pilot and let's talk again in six months to, okay, maybe we can start with all the stores.

And that's so dramatic. And this velocity in the space is extremely dramatic. People like DAO, uh, are not responsible for selling online. Yes, their post will sell some online, but they'll let, they'll lead some traffic. But they're really responsible for is creating a relationship with retailers. That feel like this product is doing something for me.

It's getting people into the store. I can use Gagadote, I have Gagadote's picture in my store. Um, Gagadote, when people do hashtag target, a Gagadote post is going to come out. I mean, if you, you know, I'll share with you some after this, but if you look at some of our posts, you'll see they're really target commercials more than they're.

[00:17:55] Connor Tomkies: Interesting. Okay. I need to check this out. I like that you're combining the impact of two brands, right? It's not just, and that's, that's something I didn't think about.

[00:18:03] Gil Eyal: You want to be really thoughtful about it because you're wondering, you know, what can we, what, what keeps Target up at night, right? It's, it's these younger audiences, right?

They have, they have a great grip on these older audiences, but how can we get people in the door, these young moms and eventually their kids to, to have that same feeling of excitement of going to Target? Okay. And it's really hard. I mean, what they've been able to accomplish is really impressive. I don't remember as a kid being excited about going to any store with my parents, but people really want to go to Target.

And so, um, it's a problem for Target. It's a problem for Walmart. It's really a problem for every retailer, which is, and for many aging brands, which is how do I keep these younger audiences engaged? And, um, then with Goodles, the question was really different, which was like, you know, we, we know we have a great product.

How do we, but people are going to assume it sucks. You were going to assume it tastes terrible because every other product in this space before has tasted terrible. So how do we get it to a place where we can get people to do trials or to feel like there's validation? And we have to tie to this brand.

So it, so it made sense there. I can give some other examples. It's not always the same thought process, but it's always a combination of like, how does everybody win in this relationship? And nine of the 10 times, it still doesn't work.

[00:19:19] Connor Tomkies: I like that you're establishing trust, um, which is good, right. Between the known brands.

But you also have this like, uh, kind of like caveat Gil, you're like, I've done these deals, but you're like nine times out of 10, it doesn't work. It

[00:19:33] Gil Eyal: doesn't work because the celebrity doesn't want to do it, or because you can't get to the right person at target, or, um, you know, the brand isn't willing to give up the amount of equity that it requires to bring on the celebrity early on, it's not one or two points, it's significant equity ownership because your valuation is low and these people are used to making 20 million a movie, so.

If you want to get these people to move, you need to come up with something that they can build in their head to be like, wow, this is really meaningful term.

[00:20:02] Connor Tomkies: What's the ballpark that you see some of these smaller companies give to celebrity endorsers for saying, like, we're not talking about micro influencers.

These are celebrities. What would you say is the norm?

[00:20:14] Gil Eyal: If you're talking about like a seed level company, anywhere from 5 percent to 30%. That's

[00:20:19] Connor Tomkies: pretty substantial.

[00:20:20] Gil Eyal: Really depends on the level of commitment. And it's all, you know, we have all the same protections, vesting, and a million things, but name one company that's fired and celebrity endorsed or head.

It doesn't look good. You can't win. It's like, uh. So you have these protections. Yeah.

[00:20:34] Connor Tomkies: Like, uh, this, this health conscious, uh, mac and cheese brand just fired Eddie Murphy and Gal Gadot.

[00:20:39] Gil Eyal: Not going to happen. Look, I mean, it would happen if they did, you know, if they pulled an OJ Simpson, right? But it wouldn't happen.

Um, and you know, I have a funny story. I actually signed Lance Armstrong several weeks before I decided to admit to using performance enhancing products. Oh no. And the amount of attention we got was so worth it. It was better than any attention you could get us before, but you know, it works, you know, it depends on your product, depends on what you're doing.

Sometimes you can, you know, Mike Tyson said it best. You make a plan and then you get punched in the face and you make the most of it.

[00:21:09] Connor Tomkies: Talking about celebrity endorsers, you have Tyson fighting Jake Paul, like, I don't know, three miles away from my house coming up soon.

[00:21:17] Gil Eyal: I think he's, it's a brilliant, brilliant promotion.

Whoever came up with it to say, wish you with me, you know, wish you with me.

[00:21:24] Connor Tomkies: I saw the, uh, Nate Diaz, Jake Paul fight, um, that was here in Dallas. And, um, it just made me think about the WWE and being a heel, you know, because like so many people in that stadium, the American Airlines Center, completely filled or just like booing, uh, Jake.

And, uh, I'm like, you guys all paid for a seat. And, uh, You see like all these advertisements for its brand.

[00:21:48] Gil Eyal: My favorite endorsement ever is Michael Jordan, Nike. And the reason I love it, other than obviously Michael Jordan, um, is because what it said about the shoe, right? If he's wearing it in the game, you know, he's got the most valuable pair of feet in the world.

Um, then he must be, um, these must be really, really good shoes, but he's not going to put his shoes in something that is, um, so we just did a deal with Victor Wimberd, I don't know if you're a basketball fan, um, for one of our companies for an energy drink called barcode, um, And the idea is it's, you know, kind of a healthier version of Gitter.

It's really healthy. It's all natural. Um, the guy who created it was a former, uh, NBA trainer, dietician that, um, kind of wanted a healthier solution for the players. Um, and, um, again, like the way we thought about it was okay, Victor Wim Mariano, if you look at him, you just, if you don't know anything about him, you look at him, your first thought is like, this guy's going to get injured in his

[00:22:39] Narrator: first

[00:22:40] Gil Eyal: game and be done, you know, he's like seven foot, eight, 11.

Uh, you know, he looks like an NBA cheat, uh, 2K cheat code, but he doesn't get injured, you know, that much. And he's, uh, you know, obviously a great player. Um, and he's, he's, part of it is really what he puts in his body. So, you know, separate from like the Gal Gadot story. Here's an example where it's not really about putting it in retail.

It's really about. You know, how do we convey a message about this product without having to say a word? We're not going to have him explain what's in it without having to explain this product is

[00:23:10] Connor Tomkies: better than others in any way. You see his like mobility and everything like that. He's a. It's, it's incredible.

So like, yeah, I can see him on the sidelines drinking a Barco drink and people being like, what's up with that?

[00:23:21] Gil Eyal: Nobody's going to say that it's because of Barco, but it's part of, you know, an extensive regimen that he lives in. I'm sure he has the best trainers and, you know, um, the statement is really, really meaningful.

[00:23:34] Connor Tomkies: Let me ask you about kind of like the smaller folks. So like the micro influencers, do you feel like, how's your optimism around that space? Let's say like The 5, 000 to a hundred thousand kind of like followers on Instagram space.

[00:23:49] Gil Eyal: At the moment, it's a really, really good angle for brands who want to get attention, though.

It requires a lot of work, you know, you have to activate a lot of them to get rich. I think they're a commodity and they don't always remember that. The problem is, um, that influencers at that level, they're just millions of that. And so brands can be really, really picky if they have the right know how and the right tools to find influencers.

Don't recommend for anyone to think that being an influencer. It's a smart career because you look at Jake Paul, you're much more likely to end up being a micro influencer, make some money here and there. Um, you're not going to make a lot of money for 99. 9 percent of the cases. And so if it's a side thing for you, if you enjoy making content, if it's something that you think you can, um, it helps you in other ways, you know, it brands you, people see you as a professional and as an expert in a specific space.

Yes, go ahead. Do it. It's really fun. If you think you can make a career out of it, I don't think there's a bright future for it. What's happened with the social networks is that they've realized that they don't want people like Mr. Beast or Jake Paul to exist because they can put a lot of scrutiny on the social networks.

They can tell the social networks, Oh, you're, you're doing this. I don't like it. And they could get a lot of fans to be really, really angry. Um, but when you have these smaller creators, um, then they're completely reliant on the social networks. If one of them gets kicked off the network, no one cares. Um, they can't really do much about it, but the social networks can activate them for whatever they want.

We just saw this with TikTok and sending all these creators to ask their fans to call Congress. What I would say is this, if you want to be a creator and you have the ability to create content that is engaging, ideally do it in a podcast, do it in a blog, do it somewhere that isn't reliant on the social networks, if you have to do it on a social network, do it on YouTube.

And if not, then just assume that this is not going to be a career. This is not going to be something that you can really.

[00:25:41] Connor Tomkies: There's so many hundreds of thousands of these podcasts popping up. And I heard the statistic and I'm not sure if this is true. So this might be something that I have to like kind of look back around.

But I heard that, um, only 1 percent of podcasts produce more than 20 episodes, which is kind of crazy to me.

[00:25:57] Gil Eyal: I've heard something similar about three episodes. Like only 5 percent will get to three episodes or something like that. I don't know if it's true, but, um, I'm not surprised as someone who's tried to start a podcast before.

It's very, very hard to do, to remember to do it. And look, we're all busy. Typically, if you're the person who's going to host the podcast, you probably are, uh, the type of person who's, if you have the, you need you to go and start one, you're probably starting other things and you're working on other things.

And podcasts, you know, the business model, if you're thinking about it as a business. Is kind of like a really, really big grind getting that audience. And then someday you suddenly become profitable. And from that point on, everything's great. You can make, but my guess is that that profitable point is when you have hundred thousand.

Monthly

[00:26:43] Connor Tomkies: listeners. Yeah, that's, that's hard. That's not easy. I think there is like this almost subcategory of like business influencers that are doing this to showcase their brand. And it's almost like I'm viewing it as a different part of the funnel.

[00:26:55] Gil Eyal: I think you could use it as a marketing channel where you, um, you know, invite people that could become your customers for something else and that's a way to reach out.

It's totally cool and it's fine. And, you know, I think it's usually been very transparent to me. Like I knew that if they're asking me. To come on board. It's because really they want me to hear about something that they're working on. I genuinely enjoy hearing people talking about what they do. And that's kind of where my career is at this stage, which is like being number two, officially or unofficially, like, can I help you with something?

Great. I don't, you know, I I'm past the point of like looking for a finder's fee or. Or, you know, how can I make something out of this? If, if it works out and I can be a part of it, great. If not, but I'm happy to know someone you should go. Great. So I enjoy talking

[00:27:33] Connor Tomkies: to people. That's when I do most of my day.

I enjoy that about these conversations is whenever I was working on my business and probably when you were working on Hyper, like, Head was down. Like, yeah, you're, you're focusing on the business. You're like, I have employees I'm responsible for and it's, it's lonely and it's

[00:27:50] Gil Eyal: hard. If you'd asked me some of the questions you asked me about hyper during that time, I just couldn't answer you because everything you say as a founder, you have seven audiences, you know, your investors, you have your employees.

You have competitors that are listening, you have potential customers. And you know, that's just off the top of my head. There's six other considerations for everything you say. So if you sound too optimistic, wait a second, I get in trouble for this. You sound not optimistic enough. Wait a second. So you you're in your head.

You're very careful about who you speak with and what you speak with. And it's very lonely to be a founder, which is why the number two position reigns supreme.

[00:28:24] Connor Tomkies: Yeah. This is a subtle plug for the number two. That's it. Solid place to be in. Yeah. So think that, um, like post exit, it, it's not just number two, as far as like being the chief operating officer.

It's also being number two, as far as finding entrepreneurs and empowering them and having them kind of run the show, it's, um, kind of switching your mindset a little bit.

[00:28:47] Gil Eyal: There are a lot of companies where the number two guy was determining, or at least in our space, I don't think it's true. The determining factor for the success of the company is who is around you.

I would have given up, failed, made mistakes. If I didn't have the mentor group that I was lucky to have with Hyper, it would never have been sold. We would have died seven times before we got to that sale or 70 times. I don't know. So the number two is actually a really, really important underappreciated opportunity.

But if you're going to be a number two, you also don't have to deal with all the horrible stress.

[00:29:23] Connor Tomkies: I love it. Here's the number two. I heard the saying and I think it's true is that there's no shortage of money, right? There's always an excess of money being trying to find places to go people looking to invest I mean, there's no shortage of ideas, um, but there is a shortage of operators and executors.

And often that number two could be that integrator or that operator, the person driving the business forward.

[00:29:48] Gil Eyal: When I look at founding teams, uh, the founder is really important, but my assumption is that they're not very rarely do you meet a first time founder that has what it takes to build a multi billion dollar company.

Not because there's anything wrong with them, just because it's a very different skill set. Um, setting up a company from the ground up, um, and you could be extremely good at that. I think I was extremely good at that, but I just don't have the skillset to run a company beyond 10 million in ARR. Not or maybe I could do it okay, but there are a lot of people that do a lot better than I, uh, and so I always look around to understand who they've surrounded themselves with and when the time comes, will they bring in a number two or will they even, you know, forfeit the number one position for someone who can do it.

Um, at a, you know, at a higher level for whatever is required at that point. But early on, if you're a founder and you have a number two, that completes you and brings on things that you don't know how to do, you know, the obvious is if you're not technical, somebody technical, but often it's a lot more subtle, often it's just people skills or it's, um, hiring or it's, you know,

[00:30:56] Connor Tomkies: Operations, the visionary and the integrator or the, the big level, kind of external facing, lots of ideas.

And then you have the other person that's more operations minded.

[00:31:05] Gil Eyal: That's often the number two guy where it's stuff in the COO. Yeah. Or they give them some other title, but that person, um, benefits from the fact that they don't have a direct relationship with the investors. They don't often have a direct relationship with the lender.

If there's a financial, um, they're just there to do a job in. The stress that comes with having to deal with, we've all had the, I don't know if you have, but we've all had great and terrible investors. And sadly, those are abundant. Both are abundant. Um, and often in times when you're a young entrepreneur, you end up taking money from whoever's willing to give you money at that point.

Especially if you're a first timer and, um, you know, you're in a hurry and, and it's very hard to know if somebody is going to be a bad investor. And a bad investor doesn't necessarily mean that they didn't pass their second, the second tranche, right? It's that there are. Making your life really difficult or, you know, voting against you in board meetings or different things like that.

Um, so dealing with them is extremely stressful.

[00:32:04] Connor Tomkies: Yeah, I, I agree with that. Whenever you're looking at like the future of influencer marketing, you said a couple of things. So one that there is some room for micro influencers, so like, but you have to set it up the right way and use the right, uh, kind of like platform.

And so what would that look like hypothetically? And then on the other side, you said that you were skeptical of like what the future of influencer marketing is. And so what's the reason for that?

[00:32:28] Gil Eyal: To convince people that we could build a billion dollar company. Now people are talking about a 30 billion industry and growing rapidly.

Um, the social networks, uh, didn't mind it early on. And that's why they were letting us do whatever we wanted to do. They never, I don't think they thought this would become as big of a business. Um, Now it's become a really meaningful business. And even if you're a hundred billion dollar a year company, a 10 billion dollar advertising budget that is being spent elsewhere is bothering you.

And the result is that the social networks are doing everything they can to make it hard for you to work with influencers. And that means that they're making, um, uh, they've changed their algorithms so that they would identify promotional content and reduce exposure to it. Means that they're in general, reducing exposure to influencers.

Um, that don't post stuff that they're interested in having posted. They're making it hard for third parties to get data to help you choose the right influencers. They're threatening to sue anyone that does anything that they, whether they never sue anybody, right? They threaten all the time. Then you go raise capital when you have a threat.

From Facebook, that they're going to sue you. Um, but they'll do all these things. And then on top of that, they'll build models where they'll say, if you pay us, we'll give you all this information. So you can come in and you can, um, use the TikTok creator marketplace, or you can boost on Instagram and other places.

If you pay us, we'll give you visibility. We'll give you all of that. The result is, um, that this market is no longer as. Accessible or financially viable as a, an alternative to invent to advertising on social network. The social networks are really, really good at optimizing what they charge, creating scarcity.

And, and, um, ensuring that everybody pays the most that they can for their advertising. And when you could activate influences, you kind of, you could bypass that, right? Cause influences would get a lot of visibility. You paid them something more reasonable. You would get that visibility. Now that these algorithms recognize it, reduce visibility.

And the only way you could do it is to go back to the Facebook system or the TikTok system. You're back there paying, uh, their sophisticated model. And the result is that influencer marketing, instead of almost always It's gotten to the point where it can work if you do everything right, you get a little lucky and you happen to have a brand that's a good fit for influencer marketing.

Um, so I think it's going in a place where influencer marketing will either, um, diminish eventually, um, as brands will kind of catch on that the ROI isn't really, really great. Or the social networks will allow you to do it within their own systems, or it will go off the social networks, where it's your government regulation.

If the government, for example, decides that this is monopolistic behavior, which, you know, some have tried to make the claim. If I had enough money back in the day, I would have, um, sued the social networks. But. Um, who knows, you know, the right, the rights, uh, legislation could change that. But generally speaking, I say the founders, um, find influencers who can, who have visibility off the platform.

Somebody has a talk show, somebody who's a sports player and is on TV every other day is a star. And that doesn't generally work for micro influencers, it generally works for celebrities or people who own. They're all channels like podcasting.

[00:35:50] Connor Tomkies: So arguably podcasting, as you mentioned, newsletters, communities, or some other type of like adjacent, uh, network.

I was talking to another entrepreneur that's in the same group as us. And we were talking about how, um, these private communities that are focused on specific niches are becoming more popular and in a way that they're kind of becoming a pseudo or a closer knit kind of like social media, right? And I'm a little curious to see how that plays out.

And we were talking about how some of them have to be paid to kind of keep out bots and AI and, and, uh, create a little bit of a friction between commercial interests and people that are actually there to connect. Uh, what do you think about that?

[00:36:33] Gil Eyal: I think those groups are amazing. And I think there's an opportunity there.

Um, if we look at, you know, people who've tried to create scarcity by creating really, really unique groups, often where they fail is when they are tempted to increase the size of the group or where they become less and less exclusive, which, you know, it's not a great word, exclusive, because we're all about inclusivity and letting everybody be part.

But the truth is, you know, the soul house, the downfall in New York is that you walk in there and you see a lot of people that are like you. And the last thing you want to see is another accountant or another lawyer. You're here to see beautiful women. And, um, hang out with celebrities, but they're not coming there because they're tired of all the accounts and lawyers that can maybe pay the 3, 000 a year and it costs to be there.

It's very hard to build a really big business because in order to build really big businesses around these communities, you have to be in a niche that is big enough to be exclusive. Without an exciting and unique. And I can't reach this audience otherwise without letting in the people that are not that stuff.

And, um, I just read this article about the so house that there's somebody that's predicting that they'll go bankrupt, which really shocked me because. Like I, I thought like every time I've known a member, but every time I get invited there, it's always packed. And it's a lovely experience. I just don't live near one where I would be a member because it's really fun.

I'd much rather work there, you know, some afternoons and out of my living room. Um, so I would definitely do it, but they were saying that it's all operating at a loss and that they're really struggling to get new members and they're the theory of, from the article was that, um, it's just not possible. The whole exclusivity thing is no longer a thing.

When you have 180, 000 members, how many of them can be interesting? And, uh, so it's an interesting space. I think if you're an influencer and you have a really big circle of influencers in a specific category, you can create something, but it has to remain either really a small group of really powerful people, really strong people in their industry, or it's really hard

[00:38:35] Connor Tomkies: to do.

I'm really curious about that because I also saw that article that you mentioned about Soho House. So whenever you, you were talking about. Kind of creating that scarcity. That's also what came to mind.

[00:38:46] Gil Eyal: If you remember back in the day, um, wasn't a group on, you have this great technology or this great idea, sorry, nothing too unique about technology, but really easily immutable, great idea.

And you do it really, really well. And you, you, you build a really successful company. And then you realize that, wait a second, everywhere in the world, there are people who are doing exactly this and copying my idea. So I have to grow really, really fast. That doesn't work really well with execution. Um, so I think that the assumption behind that article is that if they're, if they think that they can take over the world, they're going to go bankrupt because they're not going to afford to open so many places and you, you, you do make money once you're up and running in New York.

I'm sure they make money, but a new place probably loses money for several years until it gets to where it needs to go. Um, But the market is going, you're not going to be unique because of two things. One is there'll be a zillion other, you're not going to be able to open as many places to do it. And two is there'll be a billion other, um, similar company, similar Concepts that are more exclusive, that are newer, simply by virtue of being newer, they're more exciting because things get old.

[00:39:55] Connor Tomkies: So what's interesting is that some of them are, well, the Soho house, for example, is public. So you can see that they're trading at 14 per share three years ago at like a 2. 8 billion valuation and dropped down 5 per share at a 975 million valuation. And they have 42 locations and 184, 000 members. And so it's kind of crazy how much of it is membership fee or overexpanding on real estate.

I mean, because this idea of like the third place is still such a big deal for everyone.

[00:40:26] Gil Eyal: You know, obviously I work with a very big real estate company, um, as my other side we can talk about, but, um, this idea of community, uh, is really, has really penetrated into the landlord space as well. And, um, most of the big buildings I predict in the next 10 years, we'll start having, you know, I'm talking about like buildings that have a thousand apartment, you know, six, whatever, are going to start having their own little versions for the communities that live there.

Um, it's not going to be just, oh, there's an office space that you can use. It's going to be all about the experience of living there because it's become harder to differentiate in that space. And they've seen what Soho house does. And they say, wait a second, you know, we have, you know, a thousand families living in this building.

And 400 of them have kids in kindergarten through third grade. How are we not opening up a kindergarten? And how are we not, and how are we not, and we have a lot of single people who live here. How are we not have a single estate? We have a lot of professionals. How do we not have them in the solo house?

And what they have is a lot of space that is underutilized because people don't go to their gyms as much as they used to. They don't, you know, they want to go to an external gym. So they have opportunities that they need to fill. And I think, um, that space is going to see a lot of landlord activity. Uh, you know, obviously Adam Neumann started his company and he's As usual, getting a lot of attention, but there are probably 20 other companies doing it.

If I had to just throw out a number that I've seen, probably a lot more out there.

[00:41:51] Connor Tomkies: To your point, there's a lot of people going through the motions, as far as these big apartment complexes, to say we have this community space. I think it's hard for some of these apartment complexes or bigger office residential complexes to do it well.

And it's, uh, they need a third party or they need a way to make it feel more genuine and authentic, and it's a little hard if you're trying to like relax in the lounge space and they're using it as part of their tour.

[00:42:17] Gil Eyal: Somebody that's known for creating experiences comes in. And creates a branding, a branded experience in partnership with the land, the landlord, right?

The landlord that has no skill set. If they know whether or not you paid rent, they're already more advanced than, you know, technologically than 50 percent of their peers. It's very, very like,

[00:42:36] Connor Tomkies: that's a good point. Yeah.

[00:42:37] Gil Eyal: But I think that's going to happen. And then opportunity is going, it's kind of like, you know, if you're Ritz Carlton, Then now you have trained, you know, employee training session, right?

Like you can say my, my customer service was trained by Ritz Carlton. So it's kind of that thing where you like borrow somebody else's brand.

[00:42:51] Connor Tomkies: This is pretty awesome because you, anytime you have like a wasting asset or asset, that's not fully used. And then you're, you're seeing like this need, there's usually an intersection there that you want to be at.

Um, What are some other areas that you're optimistic about?

[00:43:04] Gil Eyal: So I just invested in the space. So, you know, full disclosure, but, um, medical weight loss, I think, uh, that's the biggest revolution we're seeing right now, I think potentially financially and impact on economy on par, maybe even bigger than AI. Um, and I'll say why, you know, one is, you know, people don't understand how much of a burden, uh, obesity and, and overweight is on the American economy.

Just, you know, you know, taking care of people suffering from the symptoms is several trillion dollars a year. United Airlines posted that if, if everybody was using this medication, Um, they would save, I think, 8, 000 pounds per flight.

[00:43:45] Connor Tomkies: Who commissioned that study though?

[00:43:49] Gil Eyal: I don't know, but, but, but think about it this, I think they have 2 million flights a year.

That's crazy. Saving 8, 000 pounds. Let's say they save 1, 000 on gas times 2 million.

[00:43:59] Connor Tomkies: I'm, I'm looking at like, um, there's like been 1. 5 million Ozempic videos in like, uh, in one month.

[00:44:07] Gil Eyal: Well, Ozempic is one example, but I think, uh, you're, we're very close to the point where this medication is readily available for anyone.

75, one in four Americans is not overweight. Oh wow. 75 percent of Americans are overweight. Of that, 45 percent of total Americans are obese. Um, that means that your BMI is, I believe, above 30 or something like, no, more than 30. I forget what it is, but, um, that means you're at risk for elevated blood pressure.

You're at risk for, um, heart disease. Um, and those things, aside from the fact that it's really unfortunate that you have to suffer from them, those things have a tremendous burden on the economy. They will free up trillions of dollars. Um, they will also impact, you know, fast food. It'll impact so many industries.

So I felt like I had to be there, but this, the, the, the one thing about these medications is they kind of remind me of cocaine without the bad stuff. Because similar to cocaine, if you sold somebody cocaine, they're going to come back to you again and again because they're not going to want to stop.

Similar to that, these drugs, you're not going to want to stop. You're going to gain your weight back. I did see a study about that, where

[00:45:14] Connor Tomkies: like they fall off and then they gain a portion of the weight back.

[00:45:17] Gil Eyal: Generally speaking, you have to stay on this medication for life. So it's an extremely lucrative space for the companies that can produce it.

But unlike cocaine, it's actually beneficial for you. Again, I don't know, I mean, I'm not a doctor. Don't, don't go and use it because I told you this on this podcast, but, um, I think that, um, avoiding heart disease, avoiding heart failure, avoiding high blood pressure is, is an extreme net positive. By the way, you also save money because people who pay for it and use it say that they go to fast food places a lot less.

So you end up spending less money than you would. So, um, it's got an impact on so many things that are positive to the economy. So Gil,

[00:45:58] Connor Tomkies: how did you get

[00:45:59] Gil Eyal: involved in

[00:45:59] Connor Tomkies: this space?

[00:46:00] Gil Eyal: Yeah, I, I had known this founder for many years, but I'd never found something to do with them. Um, their doctor, forward doctor, who actually worked for one of the companies that, um, that created the branded medication.

And they become an expert on what it requires to be able to produce this medication legally, um, and how you can obtain it, uh, without violating any, um, any, uh, trademarks and things like that. And, uh, obviously I am not a big enough investor to start a company like this on my own. So I kind of said, let me help you find funding.

Um, and you know, if, if, cause I'm nice, maybe let me write in a little check at the end, cause it really, we ended up finding funding very easily. People are really interested in this space. And they really didn't let anyone else come into the round except, uh, for me, because it's only because I was there.

Right. I, I have some value, but really, you know, it's, it's a doctrine and the money that they'll spend on marketing.

[00:46:54] Connor Tomkies: So does it have a name and a website yet or not yet? It's

[00:46:56] Gil Eyal: not live yet. Maybe by the time this podcast is live, I'll be able to share it in the comments. That sounds

[00:47:00] Connor Tomkies: great. Um, Gil, where should people go to find you?

[00:47:03] Gil Eyal: If you're looking for capital in your CPG space, www. stardustventures. us. If you just want to email me, it's Gil at stardustventures. us. Um, if you're looking for, if it's proptic, real estate, um, world trade center related, um, yes, use the same email.

[00:47:20] Connor Tomkies: That sounds great. Um, Gil, thank you so much for being on the pod and we'll be sending out some videos soon.

[00:47:26] Gil Eyal: Thanks for having me. It's been

[00:47:27] Connor Tomkies: so much fun. Have a good one.

[00:47:29] Narrator: That wraps up today's episode. For more inspiring stories and valuable lessons from successful entrepreneurs, be sure to listen and subscribe wherever you get podcasts. Thanks for listening. Until next time, keep pushing boundaries and writing your next chapter.