I interviewed Kris Hamoud, CEO of Paytagz, about his startup journey, customer acquisition, his Boost.VC experience, goals and future of his company. Watch the full video or skim the audio transcription this post.
Here’s a quick recap of what we covered:
Kris shares his inspirational story behind how he entered the startup scene, coach surfing, using life hacks to survive Silicon Valley and his experiences Boost.VC.
Kris discussed how he started PayTagz’s goal’s, future and how one pivot changed eveything.
Kris Paytagz mentioned his keys customer success factors and how honesty with customers pays off.
The following is an audio transcription that was cleaned up for readability purposes.
I. Startup Journey
Rodrigo Fuentes (RF): What is PayTagz?
Kris Hamoud (KH): PayTagz is a way for brands to sell their merchandise directly to consumers via Instagram and that is like the easiest one liner that I got [Laughs]
RF: What’s your role at PayTagz?
KH: I’m the founder and CEO and CTO as well, I did all the coding.
RF: How big is your team today?
KH: Currently, we are two people. It’s me and Jacquie Daly. She manages marketing
RF: You have an inspirational story: let’s rewind a few years. How did you end up in California and how did you come to start PayTagz?
KH: So I moved to California in May of 2013 and at that time I had this want-to-be start-up thing. It was a travel site that I’ve made with a few of my friends and I was like “Alright, we can do it. Let’s go to California.” So I was the only one that went to California naturally and things didn’t work almost immediately. The whole thing crashed. It was a bad but I continued on, I wanted to be in the startup game. I was just hanging around the startup scene going to meet ups and seeing what people were doing. But at the same time I had no income stream. So here is the inspirational part, I go to meet ups and there everyone has an idea but they don’t know how to build it. I know how to build it. I would build people’s MVPs for their startups for free but in return for being able to sleep on the couches. I did that from May until October last year. In the meantime I’d actually started what would be PayTagz. Originally it was a way to tweet money to people for the same purpose buying from the people that you follow or so on to your followers. And that was a good enough idea to get me into Boost VC, which you and I were both in, and from there they told me that Twitter wasn’t necessarily the best platform just because it is not as visual as like Instagram. So I scrapped all my seven months of work and then restarted from the beginning with what would be Instagram PayTagz.
RF: Very cool man and I know along the way you end up having to create a lot of life hacks. Tell me about the McDonalds life hack. I was so inspired by that.
KH: The McDonalds thing, I don’t recommend people do it if you actually have money but if you are actually hurting, it’s not a bad way to get food. Basically, you can go in to any McDonalds or any fast food restaurant in general, it doesn’t really make a difference. Pick like three items off the like their cheapest menu. The dollar menu or value menu or whatever it might be and just… [Laughs]
KH: So you go into the counter and you say “Hey, my Dad just came through like the drive through a half hour ago and he was missing a McDouble and a fry” and they would say “Do you have the receipt?” then I would say “No. I’m sorry my Dad just called me from the road and he was telling that there was no food or that he was missing these two things.” They usually respond with “Oh okay. Normally we wouldn’t do this. Usually we need to have a receipt but we’ll make a special exception in this case” They’ll just give you a free bag of food. And I’ve done that…. I’m not trying to brag about it but I’ve done it 10 to 20 times over the past or between May and October. I did it probably 50 times.
RF: You got to do what you got to do man.
KH: You got to do what you got to… It is in a moral grey area but you got to do what you got to do like you said but that’s one small hack. It’s a good one.
RF: Cool. Thanks for sharing that with all of us.
II. Customer Acquisition
Video – 4:41
RF: I want to switch over to customer acquisition at PayTagz and things are heating up. We’ve got a lot of very interesting partnerships lined up. I don’t know if you could name names yet but I want to kind of go back first and talk about PayTagz. Do you consider yourself or PayTagz a marketplace? How did you solve Chicken & Egg problem?
KH: Yeah. PayTagz is a marketplace where supplies are already been filled. There is just no way for people to purchase it or sell it. So basically you have a chicken and egg problem within this marketplace but it’s only because there’s no feeder there’s no way for chickens to make more chickens or eggs.
“PayTagz is built around the idea that all these people already have a huge number of followers. Take American Apparel for example, they have 1.1 million followers on Instagram and they also have a lot of merchandise that they want to sell. However, Instagram has never been a sales channel before because there is never a tool to do it.”
The chicken and egg problem gets solved and relatively easily, you have to be good at closing. For example contact American Apparel, tell them we got this really cool tool that will allow you to sell your merchandise to all your 1.1 million followers. You have a new revenue stream. If they want to they’ll do it and then they’ll inform their buyers so you solve both the chicken and egg problem because you tell American Apparel that they can sell to their followers and then they will tell their followers that they can now buy it through Instagram. So that’s a really beneficial thing to the business that I run.
RF: Describe your first sale/customer.
KH: The first person actually sold me their clothing and then I sold it through PayTagz, it was a convoluted way of doing it but it was a startup here in San Francisco. They had a bunch of startup T-shirts and had a cult following. They told me ou can have them for like 5 dollars a piece, which is really cheap. They gave me 55 T-shirts of various sizes and genders. From there I sold them through PayTagz for about 10 dollars a piece and had a huge conversion rate. It was amazing. It worked really really well. So we had 75 people commit to buying it and then we ended up selling all 55 of them so it has an 80% conversion rate, approximately. That was the first sale and I used that in order say “this is a use case, it worked for this company. It can probably work for your company as well.”
RF: And how did you go about engaging with the T-shirt company? How did you get on their radar? How did you convince them to take the risk to work with you?
KH: They work with people not companies and I mean that’s usually true for startups.
“Startups will work with people and not products”
So all I did was be as genuine as I could and say “This is what it can do. Here are the faults that I know are still in the system. I know that certain things don’t work.”
“When you are up front about all the problems that you have currently, they are more likely to want to help you solve those problems together. The beautiful thing about the valley is everyone else wants to help whether you have a small startup that hasn’t been funded or a startup that’s raised 100 million dollars. People are generally willing to help but you have to earn their trust and prove that you actually do want to work with them”
RF: So how do you go about customer acquisition today? How do you contact huge brands like American Apparel? How do you get them to take you seriously?
KH: That’s really hard. I’m 22 so that’s one reason why they don’t trust me. You tell them that there’s a revenue stream that they haven’t tapped yet and most companies are very eager to make money in any way they can. So if you come to them with a new product and you say “Hey I’ll let you sell on my platform and I wont charge you. You can keep all the money, I won’t take a commission. I’ll even throw in card charging fees. It’s all free. They will at least give you one trial and from that one trial it’s usually enough to close them. Then from there you can start collecting fees.
RF: But how do you contact them initially? I mean an organization like American Apparel for instance is so huge. I’m sure they have dozens of employees in their marketing department, the retail channels, a customer experience manager or product manager. How do you and Who do you contact and do call them or do you email them? How do you go about this?
KH: I mean I only have 213 connections on LinkedIn but it’s good enough to just search for head of marketing and head of social media. Once you find whoever you are trying to talk to. You send them a message and you keep sending them messages until they’ll tell you to stop or they say talk to this person.
KH: You can get some pretty angry emails that way. And most likely get more negative emails that way than positive. The positive emails are way more positive than all the negative emails combined. Basically what I’d do is I’ll just go through LinkedIn and I’ll just look for people that seem of interest in me and always bother them until they answer [Laughs].
RF: So persistence pays in other words.
KH: Persistence does pay. If you are super shy like I am, then just send them through emails. You don’t need to see them face to face [Laughs].
RF: What is your primary goal?
KH: Right now, we are just focused on growing and proving that the system itself works. So that being said signing up as many merchants as we can at the moment, getting them to try it, test it, use it, and when they see the results of it they are more likely to say “Yeah this works, let’s keep doing this”. When you have more and more people that say let’s keep doing this, it is easier to get more and more brands on board. I guess my goal at the moment is to just get as many brands as I can on board.
RF: What is your primary challenge here?
KH: I tried to make the platform as easy to use as possible and in doing so, people actually feel like they are missing steps when I tell them how to do it so they are reluctant to try it because they think it’s going to be a lot more complicated than it really is. After cold emailing people then I try really hard to meet with them in person in a coffee shop or at their office or wherever they maybe. They will voice every concern and they have a lot of legitimate concerns. Getting over those concerns such as how does it really work, how hard is it to sign up, does it cost money, what’s your condition, what about this feature, what about user data and how do I get all this stuff. You just answer them as truthfully and honestly as you can.
RF: Man with integrity I like that. Why not list all these kind of information in your website if it’s not already there?
KH: It is there but when you are in person it’s a lot easier to walk them through step by step. It is such an easy platform to use or at least I tried to make it as easy as possible that some people feel like they are missing steps. When they feel they have missed steps they think it’s a lot more complicated than it needs to be and that’s one of the reasons why 90% to 95% of the people say no.
III. Experience at Boost.VC
Video – 13:30
RF: You were in the third class of Boost.VC. What was your favorite part about that experience?
KH: The network by far. Like all the people that I got to meet, you, the SIF team and Red Lion Labs. The people of Boost were by far the best part of Boost because as you may know these
“Companies will just come and go but the connections that you make and friends you make in life are hopefully there forever”
RF: When you think about Boost VCA is there something you would do again?
KH: Oh in a heartbeat, if I had another company and I already have a bunch of funding. I’d still go through Boost. I would definitely go through Boost again.
Video – 14:24
RF: What do you wish you’d have know 3-5 years ago?
KH: I wish people would have told me back then because I actually didn’t learn this about myself until I’d say either late 2012 to 2013. It’s super cliché but if you actually really want to do something then there’s no excuse or if you want to do something then you won’t come up with excuses. You’ll just do it and if you actually come up with an excuse then you don’t really want to do it.
“Commit to what you do and it will almost always pay off. That’s how I’ve made through that summer of homelessness, that’s how I made it through Boost and that’s how I’m trying to make it with PayTagz. Just commit to make it and everything else will take care of itself.”
RF: What is the hardest part of doing a startup?
KH: For me, personally, I think about a lot of things that can go wrong a lot. So it’s like mental strength is really important at least to me just because without it then sometimes I get really down on myself thinking why am I doing this. This is a waste of time. I’m a disappointment to my friends and my family. You just have to have the mental strength to work through those times and then you see something super exciting like a closed deal and you will remember the whole reason why you even started.
RF: I hear a lot of cliché. I know exactly what you mean. It’s the ups and downs, the startup roller coaster, and the ups make all the downs worthwhile.
KH: Absolutely. And one of the major problems or different problems when I was doing it all by myself originally. I guess loneliness is another one and the inability to bounce ideas off of people. Loneliness and mental strength are the hardest parts of starting a startup in my opinion.
RF: What one piece of advice would you give to startup founders?
KH: Don’t quit prematurely. If you can start a startup and then it fails and you can say “I actually did try as hard as I could. It just wasn’t a good product. It just wasn’t a good team” whatever it may be. As long as you tried your hardest then you didn’t really fail. That’s super cliché but it is extremely true.
“Try until you fail and when you actually fail to the point where you can’t keep going then make sure that you can look back and then say ‘I did everything I could to make this successful and it just wasn’t working’ If you could say that to yourself then I think you did something special.”
If you liked this interview, check out another exciting interview with Jordan Boesch CEO of 7Shifts:
Big thanks to Kris Hamoud sharing his startup story and key customer success factors that will help you get in contact with the customer experience manager and product manager of any company.
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