GOAT Co-founder Eddy Lu On How His Sneaker Startup GOAT Achieved Unicorn Status
Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.
With LA Tech week approaching, I had to pull one of my favorite Office Hours’ episodes spotlighting a unicorn ecommerce sneaker startup GOAT, when co-founder and CEO Eddy Lu talked about how he achieved success and shared his insight on when to know if it's time to pivot or quit.
Serial entrepreneur Lu and his co-founder Daishin Sugano are both L.A. natives and believe that the city of angels is where GOAT is meant to be.
“There is just no better place than L.A. to launch a consumer facing company because there's such a diversity of customers,” he said. “And it's not as homogenous as some other areas in terms of the experiences that people can bring.”
Prior to launching GOAT, Lu and Sugano worked together on a few other businesses that were mostly unsuccessful.
They raised a Series A of $6 million from Upfront Ventures for their first startup, Grub, with Us, after participating in Y Combinator’s program. But unfortunately, Lu said they came across too many friction points and needed to pivot.
”You really have to be honest with yourself,” he said. “So we tried to remove every single friction point from what we got from customer feedback and at that point, it still wasn't working. So we said, ‘It's really time to move on.’”
Shortly after, the two focused all of their energy into launching their sneaker marketplace GOAT at a time when the sneaker reseller market was booming. Lu said that at one Black Friday event, the team decided to discount the hottest sneakers of 2015 to retail prices ($200).
Local sneaker publications caught wind of this news and it blew up. Due to the overwhelming coverage, GOAT signed over 100,000 new users onto the platform a week before the shoe drop.
As exciting as this was for Lu and the business, the platform was not built to withstand that many individuals accessing it all at once.
“As you can imagine when 100,000 people try to access a non-skilled server on the same exact second, on the same exact day, chaos ensues,” he said. “So nothing worked on Black Friday and people were so mad at us. We had 1000s of customer service complaints, death threats on Instagram, it was just madness.”
But despite the user outrage they received, the situation was quickly rectified and a trusted advisor shared some advice: "at this stage in your company's life, it's better to be hated than unknown."
Lu said that while looking back at that day was so painful, he would have done it a thousand times over because “that was our true inflection point.”
“We literally did not look back from that point in time because while our consumers hated us at that moment,” he said, “they experienced the app and they started to understand our value proposition.”
To date, GOAT has over 30 million members, over 100,000 SKUs and over 2 million listings.
“It's because of that exact moment where people started to understand what we did so that they could just trust us,” Lu said.
dot.LA Reporter Decerry Donato contributed to this post.
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Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.
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