How I Built This with Guy Raz - The Knot: Carley Roney & David Liu

Episode Date: March 12, 2018

When Carley Roney and David Liu got married, they had a seat-of-the-pants celebration on a sweltering Washington rooftop. They never planned to go into the wedding business, but soon saw an opportunity in the market for a fresh approach to wedding planning. In 1996, they founded The Knot, a website with an irreverent attitude about "the big day." The Knot weathered the dot.com bust, a stock market meltdown, and eventually grew into the lifestyle brand XO Group, valued at $500 million. PLUS for our postscript "How You Built That," how Michael Dixon's business, Mobile Vinyl Recorders, uses portable record lathes to cut vinyl at parties, weddings, and music festivals. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.com. We put together this deck. We practiced this presentation. We go through this whole dog and pony and talk about what we're planning and doing and what we're going to build. And he looks up and he says, this has got to be the worst business. I've ever seen. And the air just got sucked out of the room.

From NPR, it's how I built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on today's show, how one couple's disastrous wedding inspired their business, the not the number one wedding planning site in the U.S. Right now, I've got three wedding invitations hanging on my fridge. And I sometimes wonder about the people behind those cards.

The six people who are probably freaking out right now. The caterers, the flowers, the bridesmaids, the groomsmen, the venue, the hotel discounts for guests, the hair, the makeup, the photographer. I'm going to stop here because I'm starting to get stressed out and I'm already married. By the way, fun fact, the average wedding, the average wedding in the U.S. now costs $35,000, and the planning for it takes between nine months and a year. So my advice, elope. And if that's not an option, you will probably at some point make your way to the knot.com. It's a multimedia platform that helps you plan your wedding.

And it's a big business. The knot is the center of a media group now valued at more than half a billion dollars, which is all the more remarkable because at one. point during the dot-com bust, the knot's stock price fell to 26 cents, but we'll get to that a little later. When founders Carly Roney and David Liu started the knot in the late 1990s, it was more like a chat room. It was a place people could pop into and type in all caps. Is anyone else freaking out about their wedding planning? Well, today, the knot says it's used by 80% of all couples planning a wedding, which is also remarkable because

David and Carly's wedding was kind of a disaster. They actually met briefly when they were both undergrads at NYU in the 1980s. They were both in the same film program, but it wasn't exactly love at first sight. Well, David was a senior and I was a freshman, and we didn't really talk during it because I thought. We might have exchanged two sentences in the entire year. Wow, the entire year. Yeah. Because he looked like kind of a super senior snob to me.

David, did you notice Carly at that time? Oh, yeah. I had a crush on it. You did already at that point. Oh, yeah. But nothing ever came of it. So after college, Carly and David went their separate ways. David got a job working at a startup in Philadelphia where he made video yearbooks for high schools.

And Carly was a script reader for a movie director in New York. But a few years later, in the early 90s, they both happened to be invited to a Christmas party by a former NYU professor. And I remember like looking across at this group of people and thinking like, who's that guy with the ponytail? Why does he look so familiar? You get a ponytail? Wow. So you're like, I don't know, your late 20s, David at this point. Kind of just you're like, yeah, I'll show up at this party.

Well, actually, I remember the doorbell ringing and hearing Carly's voice. And I immediately remembered her. Wow. And she walked in and made a B-line for the vodka. And went up to you and said, hey, handsome. Well, what's funny is we ended up probably a little bit of... We pretended that there was a project to work on together. We were like, we should talk about this more.

Maybe we could work on something together. And so we both left the party with the premise of being back in touch. But clearly there was interest beyond, I mean, right? Or was it just super earnest? Like, you thought, yeah, let's collaborate. No, it was totally a ruse. Okay. It was a ruse.

Okay. We had our first date in February. We moved in together in June. We were married in July. Oh, my gosh. You jumped through this story so fast. You've gone from ponytail at the party to being married like seven months later? Yeah.

Yeah. Well, was the irony that one of the starting ironies of the story is that, you know, I have divorced parents. I never thought I was getting married. I didn't believe in marriage. I thought people just sort of like Jean-Paul Sargent. and Simone de Beauvoir, it would be better to just be in love with someone maybe but have your own home just in case. And then I met this guy and I'm like, this is kind of amazing. He's so amazing. He lived in Philadelphia at the time. And I actually then moved right to D.C. at that time to work on a project at the Smithsonian. And so we started this like long distance romance between Philadelphia and D.C. And I don't know if it was like something in the air or it was just like mad, true love. but one time we were sitting there

and we were talking about taking a trip to Hong Kong and I said, oh, you want to get married in Hong Kong? Uh-huh. Just like out of the blue. I don't even know what I was thinking. He said, sure. And I was like, okay then, let's get married.

Wow. So you go to your parents, Carly, and you say, you know that guy, David I've been telling you about? Yeah, we're getting married. Well, what's funnier is like, I haven't told you about this guy, David. Oh, okay. But by the way, we're getting married. You might want to meet him prior to the wedding.

And did they say, Carly, this is crazy. This is not going to work. This is not how marriage is last. That's exactly what they said. That is exactly what they said. And in fact, turns out, and I never knew this, they had sort of had a whirlwind romance and gotten married very quickly and ended up divorce. So this was just like their biggest fears playing out in front of them.

And, you know, because you're, you know, like young and spit, and you're like, you just don't understand mom and dad. So you guys get married and how's the wedding? What's the wedding like? So we were trying to look back at why it was that we picked a date of July. In D.C. In Washington, D.C., but where I am, it is a horrendously oppressive time of the year. July in Washington, D.C. is a time when people leave.

On a rooftop outside. On a rooftop outside in July, in Washington, This is going to be your wedding day. And really, how hard can it be? You're literally throwing a party for 80 people. Like, what do we need? We need, like, a location. We really didn't have a place in mind, but we figured we could find once we sent

without the invitations. Which were... The invitations were postcards from the National Zoo that had pictures of Pandas on. It's really making us sound crazy. And it said, what, just show up in Washington, D.C. on this date? We'll give you details when you arrive. Exactly. It's a July 10th location.

TBD. Okay, got you. But it was all, you know, kind of in the spirit of like, we're just going to throw this fun party. And, you know, I're actually community around us pulled together. And that was the fun part about it. My aunts who live nearby were like, we're going to go get flowers at the farmer's market. Another aunt of mine was like, I have a friend who has a, there's a rooftop on the top of her building, which is a block away from your home. And then there was this Peruvian restaurant near us that we knew kind of served fun tapas and paella, so we went and asked them. I mean, we really just figured it out over the course of three weeks. And it sounded, at this point, I'm kind of loving it. Like it's like the first original DIY rooftop, you know,

edgy wedding, alternate wedding. And the only problem was that, you know, you still watch the news those days to find the weather. And we sort of turned on the news on the Wednesday before. and saw the weather chart, which included... 108. It was 112. It was climbing. It was going to be 111 degrees on our wedding day. What?

A hundred and 11 degrees? The story just gets worse from there. It's boiling hot. Our guests look like they're dying. We had, you know, booked this venue. The venues. Air conditioning had broken from trying to get the place cool. Oh, wow.

And as we said, it was like a beautiful Peruvian place. and because, you know, we have a flare for the dramatic, I thought that the most incredible thing would be if instead of serving the paella that we were serving behind the scenes, if they would bring out the paella and kind of walk it through the room. The giant plate of paella, right?

Steaming. Steaming. A great idea. Yeah. And? Yes. So my only horrifying part of my wedding day was turning, looking up,

and seeing my grandmother's face. as they walked this steaming plate of paella by her. I mean, she was just horrified. Everyone's already drenched in sweat. And this steaming, fishy. I mean, it was like, oh, my God, this is such a colossal disaster. Everyone is so completely uncomfortable. There's no air conditioning.

And really, everybody just wants snow cones. Everyone wants the hell out of there is what they want. And we walked away from that evening being like, oh, my God, I never would. want to do anything related to weddings ever again. What a crazy industry. Why isn't it easier? Why isn't there a place to find this information? I just like, yeah.

It was exactly all the things we thought would be horrible about planning a wedding were. And so we slammed the door and never wanted to think about it again. So 1993, you are married, you're living together in Washington, D.C. What are you guys doing at that point in your lives? You're still at Smithsonian, Carly. Yes. We finished the project. We all move back to New York.

To New York. Start grad school. Start grad school, right. So you start working on your ideas and projects? So in the very first semester, I'm taking this class on interactive media and this new technology that was going to transform the world was CD-ROMs. Yes. Yes, they were going to transform the world. Exactly.

They were, yeah. And we started noodling on this idea that this project that Carly had been working on all summer was going to be the single largest collection of Smithsonian objects collected from all the different museums and was being brought to Japan. And it was going to talk about American history. And we said, that's such a shame that the American audience will never get to see this. Why don't we see if the Smithsonian will hire us to produce the sort of epic American history disc? You know, it has the dizzy Gillespie's trumpet and the ruby slippers and the Apollo Space Capsule and, you know, all the work is already done. We can just, you know, scan it and put it in and some animations, music, and we have a CD-ROM. And we pitched the Smithsonian and they thought it was an awesome idea.

We thought they had a budget. And they said, great, you guys, if you can find someone who will pay for it, you can do it. Which is already far-fetched. Right. It was not landish. agree to have two people who know nothing about anything. Right. And we walked into the Egghead Software Store and started pulling CD-ROMs off the shelf and

writing down the names of the publishers and started faxing proposals to people. Wow. And we had this one group out in Portland, Oregon, called us up immediately, said, we're doing edutainment discs. This is right in the center of her bullseye and American History Disc with the Smithsonian brand. They flew out, took us to a... Smith and Walensky for a big steak dinner. And at the dinner, the guy writes on a cocktail napkin,

one gold master, American History CD-ROM, Smithsonian content, $100,000 budget, six-month delivery date, sign here. What? Wait, you guys have no experience. You just pitch this half-baked idea to the Smithsonian. You then faxed this half-baked idea blindly to a bunch of publishers. and they, this one company bites.

Yeah, and we actually said, can we, can we go to the bar area to discuss this for a second? And we go in there, we're like, is this, is this binding? Is this a real contract? What happens? And we just said, you know, whatever, let's just go, let's just sign it. And we went in, we signed it. And the guy turns, you know what?

You know this is not a binding contract. We said, we assume so. And he said, but this was a test. This was this test to see if you guys had the hutzpah to actually sign this napkin. And he said, let's do it. Wow. So you get this money and you start working on this project right away? Yes.

I mean, that was it. We basically founded a business. We used all of our film school experience, actually. We were suddenly like, oh, good. And we literally hired all my classmates. Everybody. Everyone said, we're on board. I mean, you know, we're all in school for this.

And suddenly to be able to create a commercial product with the Smithsonian brand was exciting. So you deliver this to the Smithsonian and then they make this CD-ROM available in their shops and stuff? Well, so the publisher. was actually very aggressive about getting the disc out. And, you know, no one was really making any money on CD-ROMs. And pretty quickly we realized that this was not going to be the medium that was going to change everything. But this publisher managed to get the CD-ROM OEM bundled

with every one of the early IMAX. So if you bought one of those IMAX, you got our disc. And as a result, you know, we got maybe, I think it was like a dollar per disc that was actually distributed. So it became a windfall for us. Yeah, no. So millions of these discs. It's sort of one of the top grossing discs of all time because it got bundled. It was such an easy win. And that was the, yeah, that turned out to be the sort of launch of our company. So you walked out of that project with like some cash to play with. Enough cash to keep the people that we had hired around, at least I think they're like.

I dropped out of grad school because suddenly I realized, well, we have this company now and we're going to work on the next project. and we were a little digital media studio. But in the middle of this, working on this project together, one of the four of us, our two friends, Michael and Rob, they sort of said, hey guys, don't you think we should be thinking about, you know, we work well together? Do you think we should be thinking about something, doing something that isn't work for hire for somebody else?

Like something that was yours that you guys would own. Right. We started brainstorming. What can we build? You know, because our vision was now to create this multi- branded, multi-platform content studio. And we started looking at the different categories.

We said, you know, sports, news, entertainment. What were you doing? You were like brainstorming. Right. And that's what's funny. Like the later story makes it sound like it was all like. Premeditated. After her horrible experience, planning her wedding,

the idea was birthed. And in reality, what happened is that Michael actually was like, hey, this guy friend of mine, And he wants to do this online shopping thing and something related to like registry. And maybe we should do something in weddings. And I think David and I look like we'd like seen a ghost. Like, oh my God.

No way. Jesus. Do you know anything about the wedding? Well, they suck. Yeah. Like completely disaggregated. Like the industry is old fashioned. And then, of course, you have that moment.

You're like, right. It's a disaster. And it would completely and fundamentally change if you introduce. introduced technology to it. Yeah. You know, there was not an MBA between the four of us. You're talking about four film grads. So our research was going to the magazine store and pulling different categories like, you know, bridal, travel, ecpecurean.

And we looked at these wedding magazines, like, wow, they're huge. Look, they're 400 pages. Just to sort of understand, like, you decide that you want to do something in content. And weddings was probably the way to go. But what would it be? I mean, this is like 96, 97, I mean a website, a message board. Yeah, this is 95. There was no websites.

So what was it going to be like a way for people to just list their services? So we were content people. So we thought the best place to start would be putting incredible, like fresh content on the internet. And the only way. Cool idea for your wedding. Yes. Yep. And so the only way I would agree to do this, the one who was suddenly I was looked at a

immediately like, you're the woman. You're got to be interested in wedding. So I was like, the only way I am touching this is if we do something really, really different. Like, the reason we didn't access any of the information that was out there when we were planning our wedding is because it was written for people who were completely had a different worldview than me. I did not dream about my wedding every day when I was born. I did not. It wasn't marrying in a traditional way. I mean, I have like an intercultural.

marriage with divorce parents. I mean, every problem there could be in a wedding was in my wedding. And those magazines made you feel like crap. Yeah. They wanted you to quit your job, sit with your mommy having bonbons and dream up your big day. Yeah. And calling it your big day. That just wasn't my thing.

I think none of my friends either were that way. Like all the women I know were like, it was, you know, at this point it's like the 90s, your hip, you're forward looking, you care about fashion. and there's like a whole, like, it's just such a different movement among young people. And that wasn't reflected at all. It was like the industry that had been left behind. Our whole overall attitude and the reason why we called it the not was that we wanted our brand to be very, like, alternative and differentiated

and not be, you know, the kind of traditional cookie cutter. These are the rules way to plan a wedding. We wanted it to be like, dare to do it differently. And, you know, if you looked at the landscape, you know, Brides Magazine, They've been around for 50 years. Modern Bride for 35 years. Martha Stewart was like a hot thing. They've been around for 10 years.

And we didn't know which way to attack that. And we suddenly realized, based on, you know, also Carly's belief in the differentiation of our brand, that we would become weddings for the real world. And we define that as interracial couples, interdenominational couples, same-sex couples. Hipster couples. Right. You're pregnant. You already have babies.

your divorce, you know, second marriages, all the stuff that we knew that the traditional media companies couldn't touch. You know, these are the marginal areas, and we're going to own, we're going to declare ownership of those. We also had a really big sense of humor. We wanted to be irreverent because we thought that that was sort of attitudeally. If you wanted to talk to brides and grooms, not their mothers, you needed a new voice. Yeah. So I'm trying to understand if you were to describe this to your grandmother who was appalled at the paella at your wedding. Would you have said, so grandma, we're making basically a magazine, but it's going to be in the computer, in the internet. Is that a fair description of how you were thinking about it?

There were, yeah, two components. One, it was like the world's coolest wedding magazine mixed with a community. Remember, this was on AOL. So we launched on AOL first. AOL had like these message boards and these chat rooms and like sites. So it was, it was you you partnered with AOL to start this up? Well, they provided the C financing. How did you even get to AOL? So Michael, a friend of a friend. Exactly.

So Michael, our Rainmaker, co-founder, had an inn and managed to get us an audience with Ted Leonces, who was running the greenhouse and was making investments. And I remember we put together this deck, we practiced this presentation. Carly, Michael, and Rob were like the marketing and presentation. geniuses and we rent our little car, drive down to Vienna, Virginia, and we had this audience with Ted. And we go through this whole dog and pony, talk about what we're planning and doing and what we were going to build. And he looks up and he says, this has got to be the worst business plan I've ever seen. Wow. And and and you just, the air just got sucked out of the room. Yeah. But by the way,

how did you propose to make money off of this in that, in that plan? Well, we, we hadn't gone to that point yet. Okay. But he basically said, he was like, look, wait a minute, what's the lifetime value? I mean, how long is it an average engagement? And he said, you know, nine to 13 months? And he said, so your average lifetime value of your customer is nine to 13 months? How do you ever plan on recouping any of your marketing cause in nine months? This is impossible.

Right. If your audience churns 100% every year, you never, if you do your job right and they find the right person, you will never have them as a customer again. Right. To this day, I credit our co-founder Robb, who stood up and said, you know, we're going to sell advertising. And Ted looks at us and says, there's no advertising on AOL. There's no advertising on the Internet.

And we said, well, we plan on selling it. But if there was no advertising, no advertising was allowed on AOL partner, no one had done it. No one had done it. Okay. There's no IAB. There's no banners. It was all basically a subscription business.

And Ted looks at us kind of funny. And then he picks up the, you know, the Brides Magazine we brought as sort of like the show and tell. and I still remember he picks it up, brings it to his nose, and flips through the pages. He goes, I don't know anything about this industry, but I smell money. He goes, let's fund them. Wow. So in 90 seconds, we went from the worst business idea he had ever heard to, you know what, let's give these guys a chance. When we come back, how David and Carly launched the knot, watched its value skyrocket with a dot-com boom,

and then fall to rock bottom with the crash. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR. Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So, in 1996, when Carly Roney and David Liu pitched their idea for the knot, the bigwigs at AOL wound up giving them a pretty hefty amount of cash. We got our seat financing by $1.6 million.

I think it was their largest investment at that time, too, in any content partners. Ironically, though, like, it isn't really that much money. money if you have to buy computers for $7,000 each desktop. Right. And, you know, there was no such thing as open source software. So we were paying software licenses. You know, there was no WeWorks. So we had to find an office to rent.

In New York? In New York. What were you doing to build the site? We wanted to make sure that the audience came to our site would see something fresh in you every day. So we treated this like a daily publication, like a newspaper. We had 10 content channels. There had to be fresh content.

and distributed every single day. What do you mean 10 content channels? You'd go to the site and there's like 10 tabs. Right. There's like planning and fashion and bridesmaids. The Great Escape was the honeymoon channel. So a lot of it was just producing and publishing content constantly. And who did you get to write that content?

I had this connection to a group of fun, really fun young writers. They were the people who wrote for Sassy Magazine, so really. really strong attitude. We had men and women. All had great sense of humor. Really good sense of humor. And we had that. My litmus test is if they would never, ever, ever write for a wedding magazine, then they could write for me. The other key piece of it, though, was really understanding. And this, we didn't, we didn't know going into it, but really realizing how important the community was and managing the community and building out the kind of platform of the different message boards and how to create connections between people and that is where the

sort of explosive what you know sort of the early concept of like a social network right how you crowdsource amazing information and that's where aOL was the perfect training ground for that because the key sort of the gravitational center of all this stuff were in their chat rooms right And, you know, these chat rooms, you had to try to turn into these thriving, continuous conversations. And we all had to man the chat rooms. We had aliases. Like, mine was Anya. And I would sit in this chat room waiting for people to show up.

And most people tend to just lurk. They wanted to hear and read other people's conversations. And you had to try to figure out a way to get people engaged and get them to participate. And so I always had this one thing that I would write. And to get people started, I would say, my fiance forced me to buy a dress two sizes too small

and said if I can't fit in the dress on the day of the wedding to not show up but you would just make this up? I would make this up. David was the only one I want to say that this was unsanctioned but you had to like you did this spur a conversation

and boy was that the fire started the room would explode everyone who was lurking would jump in. You were a troll. You were an early internet troll. And I can and I could slowly then back away and that room would just keep going for hours and hours and hours. You know that you'd drop mother-in-law. The word mother-in-law always gets a chat room going or, you know, misbehaving bridesmaids.

It's just all about like putting the theme in play. But what it did was it taught us to listen to our audience. Yeah. Was it, was the site making money pretty fast through, you know, those AOL subscription dollars? No. No. Okay, okay. Right.

Well, if you think about the internet at the time, which was, I mean, mostly men. Yeah. Even an AOL was probably the most women of any place on the internet, and still that was mostly men. Yeah. And then people getting married, since there are only 2 million of them in America at any given point in time, you're starting to, like, get down to a very small set of people who could even potentially be our customers. But I think in those first week, I remember our monthly visitor account. Like 15,000.

Oh, I think it was 7,000, and we were like 7,000 out of 2 million Americans. Like, we've got a long way to go. Yeah. What we really had to do was go out. Our first hire was a salesperson. Yeah, you needed advertising. We needed advertising. In fact, one of our first advertisers, in fact, I think she may have been our first advertiser, was Nicole Miller.

And she had this bridesmaid's dress line that was cute, and she wanted to market it as something that you wear again. And Nicole came to our office, and I remember we were showing her the little piece of of art that we had created that were essentially the first banners. You know, there were little buttons that would sit on the site. And, you know, Rob would explain to her, hey, you know, people can click on this. And she said, well, what will my buttons do? And we realized that she didn't have a website to link to. And he said very quickly, well, they'll link to a catalog of dresses that will build for you. And she was like, oh, my God, that's amazing. And, you know, we were basically selling

links and buttons and clicks that were leading to other places that we had to suddenly create for the advertisers. Which the advertisers, I mean, for the advertisers was this new, shiny thing that they didn't understand and they were like, well, these guys understand it. But I have to assume that the ad rates at that time weren't that high, right? They weren't paying that much money at that time. Or were they? They weren't. I think our first year total revenues were maybe $70,000. Yeah, $70,000. Remember, like $71,000? You could not. I mean, the $1.6 million. million was that money was burning quickly. It was almost gone. We were rapidly running out of money.

And what saved us was we had found a amazing book agent, Chris Domicino. And remember, our aspirations was always to create these multi-branded platform. And she actually managed to get a bidding war from multiple publishers on a three-book deal for the not. And that money actually, that infusion of. cash saved the knot at that time? We lived off of that advance for probably a year. What was the advance? That $350,000.

For three books. Yeah. And so you put that back into the company, but then you have to write books. You had to write three. You're telling me. Well, Carly, we had just had our first baby. And so Carly literally came back from maternity leave of all of maybe three weeks. And the image I still have of her is like breastfeeding our daughter while furiously

typing away at the computer because we had to deliver the first manuscript at a certain time. Just sounds miserable. I'm getting hives listening to this, my own story. Did you go to investors? Did you think we need to go to private equity people or venture capitalists and try to get some money? We hadn't thought about it yet. We were trying to think of other ways that we could make money and build the business. And we had this idea and we said, you know, the thing that Bride seemed to be really vexed about,

is this whole registry process. Yes. Isn't there a way to, like, completely reinvent that and create an online gift registry where they register every day want? You're not picking the gift anyway, so why couldn't you just, like, buy it on the Internet? And we said, this has got to be the thing we do. And that actually prompted us to go try to raise money to build the first online gift registry. So remember, this is 1997.

And so when we just launched the website in July. Right. When we act like it's super mind-blowing to think of an online gift registry, you have to remember that, like, nobody even really bought anything on the internet. Yeah. And so how did you, what did you do? How were you going to make that reality? We needed to raise money. Yeah, that's when it became extremely clear because no one had online gift registries yet or really.

There was no way to do it. We actually realized that to do this, we would have to get the inventory ourselves. Right. At that time, our bride count or whatever, we called it our member count, was really growing in a very significant way. And word of mouth was our only way we were marketing. We didn't spend any money advertising. No, but like brides who discovered us in this, I think, was a lot about our brand and our attitude. Like, once you found us, you wanted to tell anyone you knew who was getting married about us.

And so we were growing in that way like wildfire. Like people really were very loyal and excited about the brand, but it still wasn't a way to make money. So when you took the concept of the registry to potential investors, what did they say? It was a really long slog. I mean, it was hard to raise money for anything that was female-centric in the digital space. And the fact that a large component of our business would now be predicated on e-commerce on top of advertising, you know, the first question people said was like, they're not going to give you a credit card number. It's like, you know, people are too paranoid about that.

They're not going to register. They're not going, you know, and I think we probably were marketing for almost a year before we came across the venture capitalists out in the West Coast that said, you know what, this is really interesting. And I think, you know, we're going to take a flyer on this. How much money did you guys raise? Three million. We launched the registry.

Was it on the knot? Was it like the knot.com slash register? Yep, exactly. New tab. A new tab. And we suddenly saw within, I think, three or four months, we had close to 150,000 couples registered in our registry. Put that into context.

That's more than what Bloomingdale's was registering back then. Wow. So 150,000 people registered within the first few months. How did they even know about the registry? This is actually the critical thing where Carly was the secret weapon. been, Carly became the person who, when we published our first book, suddenly appeared on the Today Show, suddenly appeared and became sort of the... The wedding lifestyle kind of guru.

Exactly. Meanwhile, not telling the world, word one about my actual wedding day. I remember the first time I was on TV, a friend of mine was like, I was at your wedding. And all of a sudden, you're a wedding guru? So were you profitable at that point? Or were you still kind of? No, we were bleeding. How were you funding this?

The $3 million, we made that last, but we were, we essentially were looking to raise another round. And within a year, we raised another $15 million. Also, no one in our office had air on chairs. Like everything was IKEA or Hand Me Down or, I mean, we didn't, we sort of, that whole culture of the internet companies now. No foothball tables. No catered lunches.

You know, you were lucky if you got a pizza. Were you guys nervous at all? I mean, you had a kid, and eventually you'd have two more. But at that point, you had a kid. You were not making any money because you were just funding this company. So you guys are probably earning. Nothing. No, I know.

I think we made $35,000 a year. If I remember correctly, which seemed kind of unfair and exorbitant, like, we shouldn't be taking this money. I mean, did you guys ever have conversations, you know, at night where you were like, I don't know if it's going to work. maybe she should just like, I don't know, maybe I should go to law school or something. Like, did you ever, or were you totally confident this was going to work out? I don't think we felt we had an option. You know, when we had BFAs.

We were unemployable. So we had to make this thing work. So by this point, you guys, you've got the gift registry going. And things seem to be humming along, I guess. And then in 2000, you decided to take the company public on the NASDAQ. So I'm assuming this was. raise more cash? Yes. So in 99, we actually had just raised money to build out and flesh out the registry. We raised $15 million. And literally a week later, we were approached by bankers who said,

the window is going to close, you need to go public. And we had fresh money in the bank. And I couldn't understand why there was such urgency. But we took their advice, fortunately. And within, I think, seven months of that meeting, we were going public. So that was December 2nd, 1999. We go public. The entire internet world collapses four months later. And we were really lucky to have an additional $35 million. So when you went public, it raised $35 million more dollars. Yes. And then four months later is a dot-com crash. Does that do anything to your stock price? We never had the super spiky jump and we didn't have a super cataclysmic crash. It just over the course of a year and a half

went from $20 and settled down to $26. $0.26. So people lost their shirts on this. Yes. Presumably you guys had a lot of shares too. Oh, yeah. We were not allowed to sell. I mean, we were locked up,

and by the time the six-month lockup had released, you know, we, and honestly, we were also, we were way too loyal and dedicated. We did not want there to be any indication that the founders had lost faith. And so we were going to hold on to the bloody end. But, I mean, the optics of going from $20 to $26 over a year and a half must have been rough. I mean, there must have been market analysts and people even in the industry were saying, this company's not going to last.

Oh, he was horrific. We had our competitors faxing our stock charts to our advertisers saying, look what's happening. They're going out of business. Do you really want to give them more money? And did that in any way affect? you know, how much money you had to spend, you had to use? Like, did you have to fire people, did you just to lay people off at that time? Or could you still kind of plug along? We never had layoffs. We were able to downsize through attrition, but we never formally had

to lay people off, in part because we were always running relatively lean. And there were people who panicked and basically sort of got out. Yeah, I think the biggest challenge was controlling the, like, psychology of your team. I bet. Who they didn't understand. your advertisers didn't understand the distinction between your growing revenue and how that had nothing to do with your stock price. I mean, it is kind of illogical. Most people don't understand it. No, exactly.

So between your young staff who also is looking like, remember those options that I got, they're underwater by about $9 or and advertisers. So there was so much emotion control. I think that was the hardest part to keep people focused. And it was exhausting. And also you do go home at night and you were like, Remember when we were actually going to walk away from this business with, you know, $30 million together and now we have like $300,000? It doesn't seem worth it.

It doesn't seem where there were definitely moments where we feel like exhausted. The low point was the summer of 2001 where the stock dropped below a dollar for over 90 days. You get delisted. NASDAQ delisted you. We get delisted. No longer in the newspaper. No, exactly. And, you know, you had to go down to D.C.

DC and beg NASDAQ to reconsider. And I still remember there was a little tribunal. You make your case. And then this old gentleman looks over and says, I'm sorry, you know, we're still going to have to delist you. But you have a great little business. Don't let it fare. What does it mean when you get delisted?

You're still a stock, right? You're still a stock. You're trading in the bulletin boards. But the key difference is now the major funds are no longer allowed to hold your stock. You're delisted, you cannot, the big funds are not going to invest in you. Yeah, the Fidelity and unfortunately, you know, that's where a lot of the volume and the support comes from with public stocks. And so the moment we got delisted, two million shares just automatically get subjected into the system.

And that's when the stock just really cratered. We went down from like 90 cents to that 26 cents in a matter of minutes. And to be listed in the NASDAQ, you have to be above a dollar for a certain number of months? To get relisted, you have to be above $5 for 180 days without institutional. And so essentially, once you're delisted, it's almost impossible to presumably to get back on there because you would have to convince people, individuals, to buy shares, right? Exactly. So, in fact, I spent the next three years going to dentist investor club meetings at the back of the red line in,

going to small cap, you know, conferences drumming up retail support to try to get the stock because that was the only way you could increase the share price. So you had to get individual investors to just buy shares. Yeah, you need it. Exactly. Thank you, Dentists of America. That just sounds so grueling. It was. And I think, you know, it was. I think that's when you put on like 25 pounds too. Well, I had this one meeting with a competitor and I think he said these fatal words that sort of propelled this thing forward. They saw this as an opportunity to acquire us, and they said, listen, you have a broken IPO.

We should just put these companies together, you know, 70, 30 their way. We can repackage it and go public again three years. This was another company offered to buy you out. Yeah. And he said, because you're delisted. Yeah. And getting relisted is like carrying a gorilla up 30 flights of stairs.

It's impossible. It's too hard. And I remember the day we got relisted in 2005. I was dying to send him a postcard with a big gorilla on it saying 30 flights delivered, take that. So it's four years you're off the NASDAQ. It's a long time. I'm trying to figure out why you didn't just cut your losses and say, we're still young. You know, we can still kind of try something else out.

This is not going to be the way that we're going to make a sustainable life. I think it was because we were never doing this. the money. Well, but you had kids you needed at a certain point you need to have some money. Yeah, but I think it was, I think it was the work. We were launching a TV show. We were launching, you know, a national magazine. There were so many really exciting things that we were building. You know, the nest came, the bump came. The nest and the bump were like the next iterations. A nest obviously about, as if anyone knows about your home and the bump about babies, children. Yeah, our audience had been begging us for years to take them beyond the wedding day.

And we, you know, people on our staff who had, like, grown beyond the wedding phase and we all had babies. They all wanted to launch it. So it just seemed incredibly fun. There was so much more to do. We always said to each other, like, if this ever becomes, like, super boring, we should get out. I mean, we're not particularly, like, planner people anyway. We didn't think about our future. We were just thinking, like, six months in advance.

Exit wasn't part of our vocabulary. I mean, you get realest. in in 05, you then launch the nest and the bump as part of the whole sort of media empire. You're working on a bunch of different projects. At what point were you, did you guys feel like, okay, we've turned a corner. Like we are, we're going to be okay. We're going to be more than okay. I'm not sure we're there yet.

No, I think once we were like profitable or it's like Cisiphas. Like you keep thinking you're ahead and that all of a sudden the boulder seems really heavy you're going backwards and you have to keep pushing again. I mean, in 2006 and seven, we wound up, we bought Wedding Channel. There was unbelievable sort of frothy expectations on what that acquisition was going to net us. And the stock hits $32. We have a billion dollar market cap and, you know, then precipitates the next, you know, minor nuclear winter where the stock starts declining again because you just can't live up to those expectations.

and then 2008 happens, and it's the great recession. And where does the stock price go at that point? Our stock actually held up relatively well. I think, you know, most media companies were down 20%. We grew 5%. You know, we actually grew that year because a lot of the marketers realized that the only people who were going to continue to spend money during this great recession

are brides and grooms. You know, weddings were truly recession-proof. What do you think, is about about your personalities that work so well together because you you guys went through such intense emotional highs and lows building this business so what do you think it was about the other person in the relationship that made it work this is where you declare your love of me and how amazing I am this is this is the romance moment exactly you know I think we were ultimately so different as people I wouldn't say that we necessarily worked well together

but we were incredibly complimentary. Where there is no overlap, there's less conflict. And when there was overlap, oh my God, it was like World War III. Fireworks, yeah. Like the two of us are both incredibly bullheaded. There are really distinct differences. Like David can kind of look up, look ahead and think of something like really bold and strategic way down the road. And then I can grab that ball really quickly, believe in it.

Like I'm not a naysayer. So I'm like, okay, you want to do that? and then I figure out how to get that thing done. When you think about the fact that you both have bachelor's degrees in fine arts and you met a long time ago and you probably were never going to, had you pursued a traditional path, never really going to make a whole lot of money, the fact that you built a company that's now, I guess, worth close to half a billion dollars, does it seem like a dream? Does it seem like weird?

Or now that you look back on it, do you think, yeah, okay, that makes sense? We're going to do this. It's surreal. I mean, at one point, someone said, do you realize 700 families are gainfully employed because of what you've built and that, you know, they can send their kids to college and buy homes and actually thrive? And there's a great sense of satisfaction to that. I think the, you know, the company has always been just an extension of our family.

And there's a great deal of pride in having been able to build something that is sustained. and can continue to grow that way. So we never really cared that much about money, but I can tell you not being worried about money, that is the true. Like, that is what I'm so grateful for. I still panic, but... Yeah, but that's like a personality, you know...

Disorder. You know, out of all the people I've interviewed, I think more than anybody else, your business really reflects the progression of your adult lives. And what I love about it is you clearly did all these very imperfectly, like your wedding was kind of a disaster. And then you, you know, you kind of struggled with kids because you were busy and you didn't probably do everything that all the perfect parents were doing. And all these companies that you started reflect all the

things that you've done in your lives. And I think almost even, you know, more to that point, our whole set of brands kind of celebrated the imperfect. I think what appeals, to people is that we were like, there is no perfect. Although there are some parents who do seem perfect. I'm not friends with any of them. No, in fact, when I picked up Carly from the hospital with our daughter, the first time from her. I really don't want you to tell this.

No, go ahead. In our used Honda, our friend had come to help, and we had, you know, Havana in the little car seat in the back. And as we're driving back from Mount Sinai, our friend asks. Yeah, we stop at a stoplight, and there's like a CBS or Dwayne Reed outside the window. She's like, so you have all the things you need, right? Like diapers. We were like, right, diapers.

She's like, David pull over. We were about to bring home a newborn. We didn't have anything. There were three diapers in the kit. Yeah. Yeah. We were going to be fine. Oh, my God. I think it also made us good business people.

Yeah. Because I think we never walked around with a hubris, a notion that we knew better. And that the process of discovery and the process of learning was constant. In a team effort. Yeah. And I think we would never be in a position to say, oh, my God, we know exactly how things are in weddings should be done or how things in pregnancy should be done. We learned it, you know, by the seat of our pants. And we embraced the people who are courageous enough to do that as well.

And you didn't, I mean, a lot of entrepreneurs will have, like, a spouse who will, you know, teach music lessons on the side, or, you know, will be a school teacher or a lawyer or have some kind of, income coming in. Like, you guys did not have a plan B because you're both in this. No, this was the High Wire Act. Yeah, although I think back, like, I would have hated to be married to an entrepreneur and not be one. One, you like, never see them. And they're just totally stressed out all the time. And I think that it was like super, super stressful and like really dangerous and painful and complicated in so many ways. And it was the most romantic, amazing, exciting, exhilarating thing on the other side. I mean, it was literally both. Like, you're building something from scratch. And it was like the early days of the internet. So it was so exciting.

And you're in the thick of it and you're hiring these people. I mean, it was something so exciting to be doing it together. Carly Roney and David Liu, founders of the knot. Since 2011, they've expanded their lifestyles empire. It's now called the XO Group. And it includes a site about pregnancy called The Bump, what about home decor called The Nest, and a website called How He Asked, which is a marriage proposal planner who knew.

In 2014, David and Carly both stepped down from the day-to-day running of X-O, which means more time for the kids, for hanging out with friends, and never, according to Carly, ever serving paella. And please do stick around because in just a moment, we're going to hear from you about the things you're building. Hey, thanks so much for sticking around because it's time now for how you built that. And you may want to turn up the volume on your device for just a second because I want to play the sound for you.

It's kind of subtle, but I think you'll know what it is. Okay, a needle scratching on vinyl, which is kind of a cool sound, right? It's full of romance and anticipation, especially if you go. grew up with it. And even if you didn't. I started being really interested in records when I was a kid. I would go through my parents' record collections and play Herbalpert or Creedence Clearwater Revival. And this was in the late 1980s when Mike Dixon was growing up in Wichita Falls, Texas. And I just was always fascinated with the fact that you had to really interact with the music in a physical way

to pull the record out of the sleeve, put it on the turntable, and play it. As Mike got older, he started hanging out in class. and recording some of his friends' bands. And a lot of them wanted to put their songs on vinyl because, as we've already established, vinyl is kind of cool. But to cut a vinyl record at a legitimate pressing plant is expensive. Your general investment was about $2,000.

And if you couldn't sell 500 copies, you were definitely not going to break even. But around this time, Mike discovered that if you just want to do a really limited run of records, like say 20 or 30, you can learn to do it yourself with something called a record lathe. A record lathe basically looks like a large turntable, and the needle is vibrating as the disc turns underneath it, and the sound wave is etched into the disc. And you would have seen these old record lathes in recording studios or radio stations in the 1940s and 50s,

and you can still find them, usually in a dusty attic or, of course, on eBay. I got really a obsessed with the machines. I bought every one that I could find. And eventually I had so many machines. I was having bands from out of town come over to my kitchen and cut records straight to the lays in the other room. The drummer would be right next to the sink. The guitar player and bass player would be next to the refrigerator. And I would be cutting the records while they played the song. Anyway, this is all happening in Olympia, Washington, in 2010, 2011. And I should mention that in real life, Mike was teaching high school. But he's also got this vinyl record label going.

And eventually he moves out of the kitchen and into a studio and then into the world to small events and pop-up festivals where he uses his portable record lathes to cut vinyl on the spot. And then in 2012, Mike and his partner got a phone call. We got a call from Converse about cutting records. for a band called the XX at their Coachella VIP party. Right. So Coachella, huge. The XX, also pretty huge. And suddenly, Mike and his partner, Chris,

are at this big party with two record lathes, making vinyl dubs of Jamie XX for like 200 people. The attendees would go and listen to some samples, and they'd say, I want this song on the A side, I want this song on the B side, and then we would cut it for them right there. And then they walk away with a disc that they can take home and play and show their friends.

And after that event? We had a ton of people that said, hey, I want this at my party. I need this at my activation or at my festival. And that's how Mike launched mobile vinyl recorders. He quit his teaching job. He moved to Tucson, Arizona. And now he and Chris do about one event a month, making vinyl record dubs, festivals, parties, even weddings.

They've been making about a quarter of a million dollars in revenue, doing quite possibly the coolest job. ever. It's something that I fell into and yeah I can't imagine having a cooler job either. You can find out more about mobile vinyl recorders at our Facebook page and of course if you want to tell us your story, go to build.npr.org. We love hearing what you're up to. And thanks for listening to the show this week. If you want to find out more or hear previous episodes, you can go to how I built this.npr.org. Please also subscribe to our show at Apple Podcasts or however you get your podcasts. You can also write us, that's H-I-B-T at npr.org. You can tweet us at How I Built This.

Our show is produced this week by Rachel Fockner, from Teen Arablui, compose the music. Thanks also to Neva Grant, Sanaz-Meshkenpour, Thomas Liu, and Jeff Rogers. Our intern is Nour Kudzi. I'm Guy Raz, and you've been listening to How I Built This from NPR.