Sara Margulis, her husband and co-founder Josh, and their staff at Honeyfund have helped over half a million couples fund the honeymoon of their dreams. Not having covered this industry before, it was refreshing to get a look into how a wedding registry company leverages tech to make couples’ dreams come true.
We went down to the Honeyfund office and spoke with Sara about how Honeyfund came into existance, and where the company is heading.
Roxanne Williams: For our readers who may not be familiar with Honeyfund, can you give us the 30,000 foot overview of what it is, and what problem you’re solving for your customers?
Sara Margulis: Honeyfund is a wedding registry, first and foremost. But, instead of stuff, you get experiences for your honeymoon. Things like swimming with dolphins, a romantic meal on the beach, or even just the transportation to get you somewhere exotic.
Josh, my husband and co-founder, was working at Macromedia as a software developer, and I was working in digital marketing at a university. We were both super stressed out with work and planning a wedding. And we just wanted to go to Fiji. We already lived together and had enough stuff for a one-bedroom flat in San Francisco. We had a decent budget for the wedding, but certainly weren’t going to spend $8,000 on our honeymoon.
Josh created a wedding website for us using a Macromedia template. He bought the domain and everything. This was in 2005. Everything was free on the Internet, but honeymoon registries were charging about 7-9% in fees — which, for us, would have amounted to an extra night that we’d have to forego. We thought that was crazy, and that we were both smart enough to figure this out on our own.
Josh put up a makeshift wishlist on our wedding website with things we were doing on our honeymoon. It was so simple: our wedding guests could select whatever they wanted, and then print out a certificate and mail it to us with a check or bring it to the wedding. Online payments weren’t available.
We ended up with $5,000 for our trip to Fiji. Not only were our guests generous, but they were very enthusiastic about the idea. They were like, “This is so cool. Everybody needs this. Why didn’t I have this when I got married?” That, to us, signaled that the marketplace of wedding guests received the concept well, and that we should think about doing it. They literally said, “You guys should do this for other people.”
We both really wanted to have the personal freedom of entrepreneurship, because we wanted to start a family, and we didn’t want to be two full-time working parents seeing our kids between the hours of 6-7am and 7-8pm. That’s no life for a family, at least not for the way we wanted to see things happen.
Honeyfund launched in March of 2006. We got to work on it about 5 months after our wedding.
Matt Vaughn: Wow.
Sara: Yeah. Back then, it only cost a few bucks in hosting a month, and a few hundred bucks in Google AdWords. All said and done, we invested around ~$10,000 into starting Honeyfund up – not including our time, of course. I handled the marketing side of things, and Josh did all the coding.
We had a splash page capturing email addresses for people interested in the service. We were using a lot of these lean startup techniques, which is funny because Josh went to high school with Eric Ries, the author of Lean Startup. Josh and I used a lot of those techniques just to cheaply and easily learn and gain users.
The very, very best thing about Honeyfund is that everyone who signs up invites 150 of their closest friends and family to the site. It has a viral marketing quality built into it that we never could’ve planned for. We never thought about it, but it just was so fortuitous that it turned out to work that way. Our only job was to make a site that people were excited about using and to make the user experience great. And the marketing was really done for us.
Matt: Everyone going to the wedding has to go to this site.
Sara: Exactly. Lots of people getting married have friends also of marrying age. By far, our biggest source of signups is word of mouth.
Around 2009, we decided that we could probably try a freemium model. Using the website was completely free, with free payment options like the ones where people print something out and give the couple a check. A lot of couples link their Paypal, but that’s just passing the user onto that couple’s Paypal checkout page. We weren’t making any money from Paypal, it was just a convenience for couples, and they were paying Paypal’s typical fee of 2.9% plus $0.30 for those payments.
Because we had such a low fee, we figured our users might be willing to come out of pocket a little bit for a premium account. There were many features that people were asking for, like, “Can we put little pictures next to our items? Can we put slideshow photos of ourselves on the page? Or maybe more design themes?” So, we packaged all that up into a premium upgrade that we charged $29 for.
I did a whole suite of market research to make sure we had the price and features right. We launched Honeyfund Premium in 2010, and Josh quit his day job. In 2011, we were featured on the Martha Stewart Weddings homepage. In 2012, we were in Time.com’s top 50 websites of the year. And then in 2013, we got a call from Shark Tank. And that was all just organic growth.
Matt: Considering Honeyfund has been around for a while now, have you had any repeat customers?
Sara: Actually, yes! There have been couples who broke up and then came back to their account with a new person. We also have a sister site called Plumfund where you can do baby funds, anniversary, retirement, graduation, and we even have a divorce category. So, yeah, we do have some repeat users.
Matt: It’s probably an underserved market [laughter].
Sara: Well it’s funny, we found people were registering for furniture and stuff for their divorce registry. It was surprising: a lot of the same things you would register for when you get married, you also do when you get divorced.
Roxanne: Does Honeyfund have remote workers?
Sara: We do. My assistant who set this up just went part-time because she has two little ones at home and she’s never been able to not work full-time. It worked out really well for her.
One of my dev guys works from home all the time. He lives an hour north, so he gets way more done if he stays in his pajamas all day. The rest of the office actually works from home two days a week because it’s just easier. It wasn’t a fully-remote team until we went Agile and I saw how well it works with Slack, Jira, and Hangouts. Now, I’m a true believer.
On Shark Tank
Matt: Tell us about the Shark Tank experience.
Sara: Their casting department reached out to us to see if we were interested in applying for the show. In season 6, they were really trying to bring on more established companies with bigger valuations and more investment money. They told us the viewers were getting bored with the mom and pop shops asking for 20 grand to get started.
We had never seen the show. I don’t really like reality television at all. I feel like it’s contributing to the detriment of our society, but that’s a whole other story.
We actually called my husband’s cousin, Ross Reback, who lived here in the Tampa Bay area. He’s a big time entrepreneur, and we called him to get his advice about what we should do. He’s a huge Shark Tank fan – his favorite show. And he said, “You guys, this is millions of dollars worth of advertising that you can’t buy on prime time television. You really have to apply.”
We started thinking about what we would do with investment money, and how we want to grow. At the time, we were already living the dream. We had the flexible lifestyle, a small office with a few employees, and a lot of great, happy users. Do we jump in and really try to push ourselves to the next level, or do we just stay here? I’m a daredevil. I said, “Let’s do it.” You just can’t say no to an opportunity like that.
So, we applied, and we got cast in season 6. We walked in, gave our spiel, and then the sharks started with, “I have questions.” And we did our best to field everything. We studied a stack of flashcards about 3 inches thick. Every stat that we could possibly come up with about Honeyfund, how much we raised, user acquisition costs, how much we earned per user, profit, revenue, everything. We were pretty ready to tackle it, and we got a deal.
Matt: That’s excellent. You said it was Kevin O’Leary, right?
Sara: Yeah. Robert offered us $500,000 for half the company. We thought, “We’re not sure if a million dollars is the right valuation.” And we weren’t really prepared to go past 25% equity, because we’d been doing this for seven years. We weren’t just going to hand over half our company.
Barbara came in and countered at $500,000 for 30% equity, and Robert matched it right away. Then, Kevin came in with a no equity offer. He said, “I’ll give you the $400,000, I just want to be paid three times that.”
Matt: The standard Kevin offer. The, “I’ll give you money. I want no equity.”
Sara: Right. “Pay me a third of this one revenue stream until you’ve paid me back three times and I’m gone.” We were like, that’s really an offer we can’t refuse. So, we went with Kevin.
Roxanne: I like that much better than having to give up equity.
Matt: Well normally, he’s doing it in a harsher way. More like a, “Pay me a residual off of every sale for the life of the company” deal.
Sara: Yeah, the catchphrase is ‘in perpetuity.’ And I actually have a friend who did a deal like that with Kevin and she still pays him a few cents on every unit. It’s been seven years or something [laughter]. He makes so much, but you know what, she gets a lot of promotion.
Matt: Yeah, not to say that those deals are necessarily bad in all instances, but for some of them, it seems like it might not be the best option. You said that you guys had meticulously studied the stack of flashcards, so you’d be ready. But out of all the questions that you got from everyone, which was the hardest to answer in the moment?
Sara: Mark really challenged us on the concept of Plumfund – we actually wanted to do distinct funds for different events, like baby fund, anniversary fund, mazel fund. Mark was not a fan of our vision of doing the different funds. He said, “Look, what you have in Honeyfund is great, but if you haven’t figured out how to scale and grow that and make it more profitable, then you shouldn’t be putting your effort towards all these other things.” And in hindsight, I see what he meant. But we were just startup entrepreneurs, we never ran companies before, we were just living the dream, having it pretty much all handed to us. We loved this idea and people were asking us for it, but he was right, we could have optimized so much more about Honeyfund before we went off in other directions.
Roxanne: Have you gone back and optimized?
Sara: We have a lot, but at the same time, some big competition has hammered us, and a couple of different challenges were thrown our way around the time we paid Kevin off to be honest, a couple years after Shark Tank.
Some of the big wedding websites got into the cash registry space, and they already have so much of the attention of our users that they have somewhat successfully lured them away from us, or usurped them before they come to us. We’ve made some headway in coming back from that, and one of our strategies entailed partnering with Target. Now you can do Honeyfund items on your Target registry.
We also differentiate on price. We’ve always had the lowest fee in terms of cash. Some of the newer sites compete with us now on that sub-3%, but we’ve launched a whole gift card universe now so you can register for gift cards. There’s no fee to the couple, and we actually earn 10 times the margin on gift cards that we were making on cash.
So, we’re getting more and more users to add gift cards to their registry. Hotels.com, Amazon, Delta, Princess Cruises, Groupon, Uber – we have 150 brands in the portfolio. Or, our users can set their whole account to cash out with gift cards. That way, they don’t pay any fees at all.
Roxanne: That’s really cool.
Sara: Yeah. And it’s been a great strategy because as our user base contracted in response to that competition, we 10Xed the profitability of the accounts.
On Culture and Diversity
Roxanne: You started with the two of you, and now you employ 16 people. What kind of growth do you anticipate by the end of 2019?
Sara: We’re going to stay here for a little bit. This is really the right size for our company and what we do.
Roxanne: Following that, I’m connected with one of your devs through the Suncoast Developers Guild chat. He complimented one of the articles I wrote, and we talked a little bit. I asked him where we worked, and he said Honeyfund. Completely unprompted, he said so many good things about you guys. I’d like to know about the culture of Honeyfund and why it’s a great place for tech talent.
Sara: First and foremost, our culture is very supportive of humans. Businesses push workers as hard as they can and then people have to struggle between balancing work and life. We started Honeyfund in the spirit of work/life balance – we were aspiring entrepreneurs looking for personal freedom, and we really value that here at the company. So, a lot of the work from home stuff I’ve talked about has been in response to what our employees ask for.
My assistant is actually great at team building stuff. We do a book club, and we’re reading Girl, Wash Your Face by Rachel Hollis, really inspiring stuff. We’re about 65% female at Honeyfund.
Roxanne: What’s it like on the tech side?
Sara: Tech side, we have a female Scrum master and then we have four dev guys, a UI/UX designer, and I’m the product owner at the moment.
We’re very much about bringing your whole self to work. You’re having a bad day, someone died, your pet has to go to the vet, your kid’s throwing up – we’re all humans, we’re all here, we’ve got each other. We do team retreats once per year so that people can get together face-to-face. Last fall, we all went to Hamburger Mary’s [laughter].
I get this feedback a lot from my team: Josh and I really understand that life happens. And in return, we get extremely dedicated staff that bends over backwards to get the job done and that’s so much more valuable than worrying about who’s on from 9 to 5.
On Tampa, Tech, and Odds & Ends
Matt: That’s great feedback to get, as leaders. Being an entrepreneur in Tampa, do you attend local events such as Startup Week? Are you wired into the Tampa Bay tech community?
Sara: Synapse, for sure. I participated in the morning session keynote this year. You guys know Dabbl?
Sara: I adore Susan, who’s a fellow female entrepreneur. We went to the Tampa Bay Business & Wealth mixer that happened a little bit ago. It’s a business/lifestyle magazine, and they feature different CEOs and founders. Not just tech, but all industries around the Tampa Bay. I did go to Startup Week as well.
It’s been really easy to connect. People are really open. I did the whole media tour when we first moved here with all the news channels and I found it to be really welcoming and friendly.
We came here from Silicon Valley. We were the tiny fish in a big pond, and now we’re a bigger fish in a smaller pond.
Matt: Circling back on your work/life balance efforts and being able to have freedom throughout your day, what’s an average day for you here?
Sara: We just put Josh on sabbatical for 3 months. He has never had a day off or any kind of vacation in 13 years. Thanks to coming here and being able to hire more people for a lower cost, we got the team to a point where everybody concentrated on things that he did. Very few exceptions, that we obviously figured out in the first couple days after he left.
Matt: Is that a mutual agreement or did you guys force it on him?
Sara: Being entrepreneurs sometimes can be, especially on the tech side of things, a little bit of a black hole. You can really get sucked in and get into this workaholic mode that you don’t even really recognize you’re in and don’t know how to get out of. So, that’s why we’re giving the gift of 3 months without even thinking about work at all. He’s loving it, he’s been really happy. So, I put on the product owner hat when he stepped away because he’d already transitioned to product owner.
My day today was pretty typical. This morning I went to the bank to open a new business account so we can earn some interest on some money. Then, I did user acceptance testing because we’re closing out a sprint today. After that, we had our stand up. Then, I had an interview with the Houston Chronicle. I had sprint planning right before you guys came. And then, this afternoon, I’m going to do some bug triage and then prep for annual reviews that I’ll do next week.
I’m all over the place because I’m the product owner on the Scrum team. And I still do all the PR for the company and I’m still in charge of all the hiring and employee stuff. It’s been a variety of stuff that I do every day.
Roxanne: That’s good. Doesn’t get boring then.
Sara: No, never bored. Never, never, never.
Roxanne: You just mentioned hiring. Being that you hire tech staff, have you seen a positive shift in tech talent when it comes to Tampa?
Sara: I don’t know if I’ve lived here long enough to see a shift. I just know that the shift brought me here. Does that make sense?
Roxanne: It does. That’s perfect.
Sara: Our cousin Ross saw a lot of the reporting going on, watching Jeff Vinik’s interviews on CNBC, and keeping an eye on the wave of growth in Tampa. He quoted me the stat that 1,000 people per day move to Florida, and 250 of those are moving to the Tampa Bay area. That’s a lot of people every single day of the year. And a lot of those people need jobs, or they’re fresh out of college, looking for exciting new companies to work for.
I’ve definitely seen that played out, and I’ve had a great time hiring amazing people. We just couldn’t hire the talent we wanted for the right price in NorCal. We were competing with Google and Facebook.
Matt: Tell us what Honeyfund looks like when it comes to retention technical staff.
Sara: Our first hire, our director of tech, still works here two years later. We’ve had a designer come and go since we came here, but everyone else on the tech side is still here.
Roxanne: What do you hope to see in the next few years for Tampa Bay when it comes to tech?
Sara: I would really love to see a flood of actual coders and top talent. Every company everywhere, no matter what they do, needs good engineering talent because they have an online presence. As a society, we have to look at our supply of talent from high school forward.
In order to have the tech talent that we’ll need in 10, 20, 30 years, we have to make some really hard choices about our educational system today or we’re just not going to have the people that have the skills. It’s not like you can undo childhood development or redo it. Brains are elastic and people can learn into adulthood, we know that now from psych research, but if you don’t develop in the right way in the first place, it’s harder to have people with the kind of level of thoughtfulness and analysis that you need in an engineer later on.
Roxanne: Who is someone in Tampa that you think is doing something cool and innovative in the tech sector?
I think that as millennials come into this adult life, married life, consumer life, they’re more savvy than any generation before them when it comes to the marketing that they’re consuming every day. They have a better sense of the bs behind it all. So, let them have more choices about how they consume it and let the brands that care get in front of them in a way that honors the time and attention they’re giving to the brand.
Obviously, I’m really excited about Embarc. I think that’s a very worthwhile endeavor.
Book and Podcast Recs!
Matt: Do you have any podcast recommendations, or any other books important to your entrepreneurship?
Sara: I recently picked up a James Clear book, Atomic Habits. That book really educates you on why you behave the way you do, the things that you don’t think about, how those things tie into your environment, and what you can do to change your habits easily.
I would definitely recommend The Lean Startup. Josh and I read Rich Dad Poor Dad, total classic, just setting us up to think about money differently. And then, Suze Orman – love her when it comes to financial planning. And I think these are all important topics for entrepreneurs because you have to think about your business as a financial endeavor, not just a labor of love.
I highly recommend Lewis House’s School of Greatness podcast.
Matt: Any further thoughts you’d like to share? Anything exciting coming down the pipeline for you, for the company, or for Josh’s three-month planned vacation?
Sara: It was definitely a big milestone, to get to that. As far as what’s coming down for the company, we just did that partnership with Target last year. That was a big splash thing. I’m giving a talk at Mr. Wonderful’s (Kevin, our Shark) annual summit that he does for all his entrepreneurs and so, we might see that on TV.
That’s kind of where my career is going: spending more time out there talking about the company, talking about entrepreneurship, inspiring people with all the stuff that I read and learn. And leaving the daily operations to people better at it than I am.
But for the company, really, we’re just continuing to expand our gift card partners, so we can offer lower fee giving to couples. We’re revamping our entire site with a brand new, gorgeous look and feel. It’s so exciting to get a facelift on the brand, on the site itself, and the app.
Honeyfund’s #1 online wedding gift registry makes it easy to give and receive the perfect wedding gift – one that reflects your unique style and makes giving fun for your wedding guests!
As the world’s most popular crowd-gifting site for weddings, honeymoons, down payments, charities and more, they’ve helped nearly half a million couples make their newlywed dreams come true with their easy-to-use platform. Their one-stop wedding registry solution offers couples the greatest value with 100% free options. Learn more here.
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