Omer (00:11.840)
Welcome to another episode of the SaaS Podcast.
I'm your host Omer Khan and this is the show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business.
All right, today's guest is the co founder of Creative Market, an online platform that lets you sell and buy handcrafted mouse made design content such as fonts and graphics.
My guest launched his first software product called Color Schema when he was still in college and went on to grow that into a six figure a year business.
A few years later he met his co founders and combined forces to work on on an online creative community called Color Lovers and eventually took that through Y Combinator.
Color Lovers grew into a community with well over a million users.
In 2011, they launched Creative Market, raised $2.3 million in funding and in 2014 sold Creative Market to Autodesk.
So today I'd like to welcome Aaron Epstein.
Aaron, welcome to the show.
Aaron Epstein (01:23.290)
Thanks for having me, Omer.
Omer (01:25.850)
So where are you now?
It's like, are you guys based in San Francisco or are you in New York or.
Aaron Epstein (01:32.810)
Yeah, the team is largely based in San Francisco, but about half of our team is still remote today when we all started, you know, because I kind of came from founding this color schemer business and my other co founders had started this color lovers color design community business and we ended up merging up.
But that's kind of the origins of our story.
But I was actually based on the east coast and the D.C. area at the time and then my co founders were up in Portland.
So the origins of the company are as a remote company.
And it wasn't until the beginning of 2013 when we actually opened up our first San Francisco office and we've had roughly half the team here ever since then.
Omer (02:17.790)
Cool.
So I like to start off by asking my guests if they have a favorite quote or just generally what gets them out of bed in the morning, what drives and motivates them.
So do you have a quote to share or are you kind of, is there something else that sort of drives and motivates you?
Aaron Epstein (02:42.030)
Yeah, I have a quote that I think we'll answer both of those questions.
So my favorite quote is actually the best time to plant a tree is 20 years ago and the second best time is now.
And that kind of drives, you know, everything that I do, which is, you know, start today.
There's no better time than today.
And if you don't start today, you're going to look back in the future and you're going to be wishing that you had started in the past.
So, you know, I was.
I've played guitar since I was 13 years old, and I played with a bunch of guys in high school, and we had this band and we were always looking for a great singer.
And so I and some other guys were like, man, we should just take voice lessons.
And we never ended up doing it.
And then five years later, you know, after we graduated college, we got back together to play music, and we're still looking for a singer.
And we were just like, if one of us had just taken voice lessons starting five years ago, you know, we'd be all set now.
So it's one of those things where, you know, I just feel like action is really important and.
And just following your passions.
Do the things that drive you.
And starting today is.
Is what drives me.
Omer (03:51.610)
That's great.
Now, I gave the audience sort of an overview and a background of the businesses that you were working on before Creative Market.
But.
But let's start with Creative Market.
Where did the idea for or that business come from?
Aaron Epstein (04:09.890)
It actually came out of when we were running the Color Lovers business.
We had this community of people that would create and share color palettes and patterns and shapes, all using tools that we had developed on the site.
And what we found that people really resonated with on Color Lovers was you didn't have to be a fancy artist or have expensive tools.
All you had to do was come to the site and use our simple tool to pick out five colors and put them next to each other and you would have a beautiful end result.
And it was something that anybody could do.
So it really made creativity and the creative process accessible to everyone.
So that was something that really resonated with us.
And so we had this community that we had built that was over a million members, and we were trying to figure out, how do we turn this into a big scalable business.
We had had some advertising that we were selling on the site, and we were making money through the Color Schemer software sales as well.
But it was making good money for three founders.
But we wanted to figure out how we grow this thing really big.
And there were two potential avenues that we saw.
The first was we could create kind of this crowdsourced color data company.
So if you're familiar with Pantone, what they do is they're kind of the color experts of the world.
And so they get a bunch of air quote experts in a room together, and they say the color of the year next year is going to be fuchsia.
And then they put out these trend reports for a few specific industries like fashion, for example.
And then all the fashion companies get that same trend report and they say, oh well, fuchsia is going to be the color of next year.
So we should all update our fashion lines using fuchsia.
And so they all do that.
And then lo and behold, fashion becomes the color or fuchsia becomes the color of next year.
Omer (06:10.420)
Is that true?
Does it all come from Pantone?
Kind of.
Aaron Epstein (06:13.940)
Wow.
Yes.
So it becomes this self fulfilling prophecy in a lot of ways where everybody's kind of operating off of the same trend data.
And so what we thought is we've got a million members on color lovers that are coming and they're sharing and rating and viewing and interacting not just on individual colors, but the palettes themselves and how the colors interact with each other.
We thought if we could tie that to demographics, then we could create a front end to all that data that we could give marketers or people looking to rebrand.
So for example, Microsoft is looking to rebrand the Xbox.
They want to know males 18 to 30 years old, what colors are trending for them.
And we'd be able to provide a customized report where they could dive into the demographics.
See almost a Google Analytics graph of different color trend lines and what really resonated with that type of audience.
So that was one approach that we were looking at.
And the other approach was we had all these people on the site that were creating different types of design content.
And so we, you know, the, the color data one was kind of in a sense like taking advantage of what they were doing on the site and taking their data and making money off of that.
The other path was kind of taking the creative content that they were making on the site, which it actually turned out was very valuable to other businesses and finding a way to help them make money just playing around in their spare time, just creating this creative content.
And so we were kind of torn between those two paths.
And what happened was MetLife actually reached out to us because there was a pattern on the site that a member had created and they wanted to use it for a wrap that they were doing around their two story building across from Bryant park in New York City for Thanksgiving.
And so they ended up paying $250 to use that pattern and we gave it all directly to the member.
But the light bulb went off in our heads where we said, hey, here's this big company, you know, they're willing to pay a lot of money for this pattern.
That somebody was just having fun playing around on the site, creating.
And so we thought, if there's a way we could find a way to build a new product that would create this marketplace and be able to scale that for everyone that was involved in the community, then that was a business that we were excited about.
Omer (08:40.550)
And so why did you launch it as a separate brand instead of just extending, making it sort of a part of what you were already doing with Color Lovers?
Aaron Epstein (08:49.590)
We actually did start going down the road of building the marketplace around Color Lovers.
We had over a million members, we had this active community, we had tools where people were creating this content.
But as we got partway through, we actually realized it's much more than the palettes and patterns and shapes that people were creating using the tools that we had built on Color Lovers.
There's actually fonts and Photoshop files and website themes and stock photos and all these other things that they were all part of the creative process that were all valuable content that designers and other types of creators were out there making.
And so we realized that the scope of what we were trying to build was actually much bigger than Color Lovers itself.
And so what we decided to do was spin off a different site, Creative Market, with a different brand that would encapsulate all of those different types of content.
And so we set out to launch that.
And it was actually a really difficult decision at the time because it meant giving up all million plus registered users on Color Lovers and starting over from zero on Creative Market.
And so that was a difficult decision.
But, you know, one thing that I like to think about sometimes when it comes to pivoting is it's really easy to decide to pivot when things are not going well at all.
Like, you know, you're not on the right track and things are not working.
And when you're on the right track and you're making a lot of money, then it's easy to know that you don't need to pivot because you're on the right track.
But the hardest thing is being in that gray area in the middle.
You know, we were making a couple hundred thousand dollars a year, but ultimately we didn't see the big scalable business that Color Lovers and our color businesses were going to grow into.
And so that's why we decided to, to pull the trigger and jump into Creative Market and focus full time on that.
Omer (10:45.770)
How long did it take you guys to make that decision and what was the process you went through to.
To make that leap?
Because you're right, it is A really tough decision to make because in many ways you're throwing away a lot of the work that you've done for years to build an existing product and to have to sort of start from scratch.
In hindsight, yeah, it's probably a great decision, but at the time, how did you guys kind of go through that process?
Aaron Epstein (11:21.880)
Yeah, it definitely was the right decision in hindsight, but looking back, I wish that we could have made that decision a lot sooner.
And the process there wasn't just like a day where we.
Where we all just got in a room and we said, are we going to do this as a new thing or are we going to do this on Color Lovers?
It was kind of an evolution that happened where we actually spent a little bit of time trying to build Marketplace stuff on top of the Color Lovers site.
And it just didn't feel right and something was off about it and how are we going to get these other types of content on there?
And we realized over a series of conversations that thinking about the long term vision for what we had for the business and that we thought that this was the big opportunity, not necessarily the Color Lovers business that we had built already, made it a lot easier to jump into that and say, okay, we're going full steam ahead with Creative Market and we need to put Color Lovers on hold so that we can focus all of our time and attention on growing Creative Market and getting that launched.
Omer (12:32.580)
Got it.
Okay.
So did you guys raise some funding right away for Creative Market or what was going on on the sort of the funding side?
Aaron Epstein (12:46.740)
Yeah.
So when we were in, we did Y Combinator in winter of 2010 and we went into that and we had Color Lovers, we had color schemers making money.
We actually weren't even really planning on raising any money during Y Combinator.
And then we got towards the end of Y Combinator and we thought to ourselves, wow, we've got this great opportunity here where all these investors are going to come hear us pitch.
Maybe there is a really big opportunity here to raise some money and grow this really big.
And so we gave the pitch and we started talking to some investors, but we were a little more focused on the color data side of things rather than the marketplace potential business at the time.
So investors, you know, they loved what we had built so far, but I think it was harder for them to get excited about a color data business.
And we ended up just kind of scrapping the round.
A couple months in, we would have been able to raise some, but not what we wanted.
And so we decided we're still making enough money to get by.
Let's just keep growing this on our own.
And we were still trying to decide which path was right at that time too.
And so at the beginning of 2011, this was now a year after Y Combinator, we actually had made the decision, it was that Thanksgiving a couple months before, where the MetLife purchase happened.
And so we had made the decision that we were going to go full on in the marketplace direction and scrap this color data idea.
And so when we did that, we went back to a lot of the same investors that weren't as interested in the color data thing, and they loved the marketplace idea and they were all in on that.
So that kind of gave us an inkling that we were approaching a bigger opportunity.
I think when people saw the color data thing, they thought, well, the largest this could ever get is Pantone.
And there isn't this massive larger market out there, but a marketplace could be really, really huge.
So we raised about a million dollars at the beginning of 2011, and then we set out to build this marketplace on top of color lovers at the time.
And so we got a few months in and we realized that that wasn't the best approach.
And so towards the end of that year, we decided to spin off Creative Market as its own thing.
And so we launched this teaser site to get people to sign up ahead of the full marketplace launch at the beginning of 2012.
And right around the time that we launched that teaser, we actually raised another million dollars to fund building this out as its own entity.
And so we did that throughout 2012.
We launched the full marketplace in October of 2012, and then we were just off to the races from there, growing 20% month over month.
And we got to the summer of 2013, I think around July, and we ended up raising another million dollars to help us just keep going towards our goals there.
And then the acquisition happened beginning of 2014.
Omer (15:45.820)
Had you raised any money before you started doing that with Creative Market?
Aaron Epstein (15:51.500)
Nope, nope.
Everything really.
The first money that we raised was Y Combinator.
So that was kind of the.
The intro experience for us.
Omer (16:00.460)
Got it.
So what was that experience like for you?
What were sort of, when you look back at the process of raising money, what are some of the key takeaways for you that you maybe would advise other people if they were kind of going through the same process?
I mean, presumably just having gone through YC made it a little easier for you guys to at least be able to pitch to the right people.
Aaron Epstein (16:30.440)
Yep, it definitely got us access to top investors, which was really great.
But just because we had that access didn't necessarily mean, you know, free money was going to be flowing in.
So you're right.
It was a learning experience for us.
And what we learned is, you know, when you're trying to raise money for a seed round, it's really a lot about, you know, the team is number one.
Because at that point, you know, some people have an idea or a prototype or something that's working, but, you know, a lot of what you're trying to do is sell the vision and sell the dream for what you're trying to build and sell the problem that you're trying to solve and that you care passionately about.
So, you know, the early stage investors, they're going to care about what's the problem you're trying to solve.
How big is that potential market?
Like, is it a big problem?
And of the team that's there, are these people going to be able to execute on it?
And also, not just do they have the skills to execute on it, but why is this team uniquely suited to solve this specific problem?
And so for us, we had been in the design space for a decade, really running our color businesses.
And so we knew our typical customers really, really well.
We had access to a huge audience with the community that we had built at color lovers.
And so when we told people, investors that we were going to raise money to build this really big marketplace, then it was something that was easy for them to get behind because they knew this was a problem we cared deeply about, really understood the space.
And because we had built color lovers already, they knew that we had the skills to build a big scalable site.
Omer (18:17.040)
Okay, cool.
Looking back at the sort of the early days of building this business, what do you think was one of the biggest mistakes that you guys made?
Aaron Epstein (18:31.840)
It's tricky.
You know, there wasn't necessarily like a massive mistake that stands out in terms of a specific event.
But we talked about making the decision to kind of give up on the color business that we had built and move to the creative market marketplace business.
And we took too long to do that, to figure out that that was the thing that was going to be the big vision that was going to be this big scalable business for us.
And so looking back, if I could change one thing, I would have made that decision sooner and gone all in on that.
You know, it's tricky to try to turn a community into a marketplace.
You know, a lot of times people try to do that.
And, you know, when you have a Community, like color lovers, the people that are there, there to kind of like play and be a part of the community, and they're not necessarily there to buy things.
And so we definitely made the right decision by splitting off as the separate Creative Market site, but it took us a while to get there.
And you know, in hindsight, I wish that we had done that a lot sooner.
Omer (19:42.730)
What do you think would have been different for you guys today if you had made that decision faster?
We just.
Because I.
Sorry to interrupt.
I was just going to say because it sounds like you've done pretty well, right?
I mean, you, you, you, you built out the business, you raised money, you, you had a good exit, sold the company.
Um, sounds like you did pretty well.
Aaron Epstein (20:05.620)
I think we could have gotten there a lot faster and I think we could have gotten there with less capital raised.
And you know, so would the business fundamentally be different?
It's, you know, hindsight's always 2020 and you know, you never really know how things would have been different.
But ultimately, you know, we would have, we may not have needed one of those million dollar rounds that we raised, for example, because we would have just jumped right creative market stuff right away.
And so, you know, we would have, we wouldn't have spent a lot of time just kind of wasting time kicking tires trying to make the color lovers business work.
So, you know, I think things would have happened faster.
We weren't the first marketplace for graphic design assets, but we tried to do things differently.
And so by taking longer to launch, we were just giving some of those competitors that, that were out there at the time just even more of a head start on us.
Omer (21:07.160)
Okay, so let's talk about the acquisition.
Was that figure actually disclosed in terms of how much you sold Creative Market for?
Aaron Epstein (21:18.680)
No, it's not public.
Omer (21:19.960)
Okay, so it's a secret.
Secret number.
Aaron Epstein (21:22.280)
It's a secret.
Unfortunately, now, being part of a large public company, it's not at my discretion to disclose things like that.
Omer (21:30.200)
So tell me a little bit about how that came about.
Were you guys looking to, to sell?
Aaron Epstein (21:38.620)
No, we weren't necessarily looking to sell, but we had, you know, this really fast growing business and had had some interest from a few companies and so we took some meetings, you know, just to see what the interest was.
And you know, like most of these start, it actually began with some partnership conversations and really much earlier, probably a year or more before the deal closed, we were actually talking to a different company besides Autodesk.
So we had been talking to them for a while and it actually felt like, you know, we might be getting an offer soon.
And so we thought, okay, if we're going to get an offer, we might as well see if there's any other interest out there to get multiple competing offers going.
And so we reached out to a bunch of partners and people that we had worked with, and investors helped to give some intros to various companies that could potentially be interested.
And we got connected with Autodesk as one of them.
And so we've been talking with this other company for a while and there are questions around, like, well, how much of your team do you really need?
And it just didn't really feel right to us.
Like it would be a great fit.
And then we talked to Autodesk and it was just kind of like came out of that meeting like, wow, this just felt very different.
The culture is just so aligned with everything we were trying to build.
They really wanted to support our entire team and continue to grow it rather than kind of just acquire the business and shove it off to the side or use it to sell something else.
And so for us, we actually ended up getting two offers on the exact same day in 2013.
Yeah, one in the morning from that first company, which we were just kind of like, eh, this isn't as interesting to us.
So they talk about the roller coaster of startup life and so it's like, oh, an offer comes in exciting, and then we look at it and it's, nope, not interesting to us.
And then it's like, okay, great, back to work.
Omer (23:45.550)
Was it that was, was it the, the number that wasn't interesting, or was it because of what you said, sort of other aspects of how you saw the, the company and what you thought they wanted to do?
Aaron Epstein (23:56.590)
It was both, you know, we, we felt like from a cultural perspective, it was not going to be a good fit.
And then from a financial perspective, it also just didn't make sense for us at all.
We had a really fast growing business and, you know, it didn't make sense to, to give that up.
The, the upside was not built in there to that offer.
So we were kind of like, okay, great, you know, moving on, continuing to kick ass with creative market.
And a couple hours later, we actually got another offer from Autodesk and it was much more exciting, built in a lot more of the upside.
Culturally, it felt good and it actually even the off.
It's funny, you know, we got these senses of different cultural perspectives from talking to both of those companies and they were even reflected in the offers.
The first offer was, well, we can Just pay your investors back this much, but save most of it for the founders.
And that didn't really feel right to us versus the Autodesk One was just kind of an all cash offer and very clean and simple to understand.
And they weren't trying to play games.
So our decision making process at that point was just trying to decide do we want to take this Autodesk offer, is this right for the next stage of the company, or do we want to continue to grow at the fast pace that we had been.
And a lot of stuff goes into that, and it's very personal for each individual founder and thinking about what they want from a personal level and from a business level, and then thinking about the team and all the employees.
And ultimately we felt like the Autodesk offer was just a really great opportunity, not just for us as founders, but for investors, for the team and for the future of the business.
Omer (25:44.650)
You know, throughout this conversation, I've.
I've heard you use the word feel or felt several times.
You know, for example, it didn't feel right or this felt good.
It kind of made me wonder how much of your entrepreneurial life has been based on making decisions by following your instincts or your gut.
How important is that to you?
Aaron Epstein (26:15.600)
I think it's really important.
You know, when I started the Color Schemer software business in my dorm room in college about 15 or 16 years ago, you know, I'd stumbled on this tool that I wanted to exist for myself.
And so I went and I built it.
And it turned out that there were actually a lot of other people that were interested in that too.
And then when I graduated, I said, okay, I'm going to see what I can do with this.
I'm already making a little bit of money as a college student.
What if I were doing this full time?
And I did that by myself for about six years, and I had automated that so much that I actually just kind of got bored with it.
And so, you know, in my gut, I knew that I wanted to do something bigger that wasn't as automated.
I wanted to grow a team.
I wanted to build a much larger scalable business rather than kind of this solo software company.
And that's actually what led me to getting connected with my co founders, who we worked on Color Lovers together, and then eventually Creative Market.
And all of those were just kind of driven by following my instincts on what looked like the next path there, and also kind of trading up on things that I had already built.
So when I was in college, you know, I spent a spring Break building out that Color Schemer software while, you know, maybe other kids were down partying in Mexico or something like that.
And then I took that, and then I traded that up to merging with my co founders.
And then, you know, we traded up to the existing business that we had built to get into Y Combinator.
And then we traded that up, you know, to raising money around Color Lovers.
And then we traded that up to launching Creative Market.
And now we've been acquired by a public company in Autodesk.
And so each step along the way is building something of value that you can then trade up.
And so for me, that's where my instincts lead me a lot of the time.
Omer (28:14.290)
So for somebody maybe who's listening to this right now and maybe is spending too much time trying to analyze a decision, it could be a big decision, like what business to start, or it could be something, you know, something, a decision about their business.
What advice would you give them?
I mean, if you were sitting down with a friend who is in that sort of situation, what advice would you give them about following their gut?
And I guess it goes back to the quote you gave as well.
I think part of it is about taking action.
But sometimes it's just difficult to, I guess, have the trust to listen to our own voice when it's easier to listen to everybody else's voice around us.
Aaron Epstein (29:03.020)
Yeah, yeah, you have to be able to kind of filter out the noise, and nobody knows what's best for you or what the right next step is better than you.
You know, we had a lot of investors that invested a lot of money in us, but ultimately, you know, we knew best what the right decisions were for the business.
And so for anybody listening out there, you know, you know, best trust yourself.
But doing something, anything is better than doing nothing.
So you're right.
It goes back to that quote.
Best time to plant a tree is 20 years ago.
The second best time is now.
Do something today.
That thing, that decision you're trying to make and you're waffling back and forth on, you know, should we go path A or path B and just pick path A and go for it?
You know, very rarely are there times in life where you pick a direction and you are locked in there forever.
But the important thing is you can learn from making different mistakes or picking the wrong path, and you can almost always correct it.
Omer (30:07.850)
Yeah, I think that's great advice.
And, you know, for years, I used to always think that a successful business was like, you know, if you kind of plotted it on a graph it would be like, here's where you start, and then there's kind of like this straight line to whatever success looks like, right?
And the reality, I think, is that it's this zigzag that goes in all kinds of different directions.
And your first step that you take might actually feel like a backward step.
But if you kind of look back and connect the dots, you kind of, as you did when you sort of described all the steps that you took, it all starts to make sense.
And I think that's the most important thing, that getting started with something is a lot more important than waiting to find the perfect thing to get started with, right?
Aaron Epstein (30:59.420)
And that's the thing that most people never see, because a lot of people probably see, for example, like the Creative Market acquisition we launched in October of 2012.
In October of 2013, we got an acquisition, two acquisition offers.
The deal closed in February of 2014.
That's like less than 16 months from when we launched that we had this successful exit.
And to a lot of people, it's like, wow, that was just an overnight success.
But when you actually hear the full story behind it, you know, this is an evolution of a business that I personally started in my dorm room 16 years ago in 1999, and just kept, like I said before, trading up to different things.
And so a lot of times, people don't see that whole history behind things.
They just see the launch date and the exit, and they're like, wow, how did that happen?
But the truth is, there's so many ups and downs throughout the entire process, and it's always much longer than you think to get to kind of the end goal.
But it's.
That's.
That's what makes it worthwhile.
My other favorite quote is actually from an Aerosmith song, which is, life's a journey, not a destination.
So, you know, that's.
We always felt like, as starting Creative Market, even if this completely failed, it would be worth it because we'd learned so much and we would grow so much.
And when I was kind of tired and bored of doing the color schemer business on my own, that's ultimately what I wanted.
You know, it didn't have to result in a successful exit.
I just wanted to learn and grow and do scary things every day and challenge myself.
And so looking back, you know, I'm thrilled that we were able to have this successful exit, and things worked out really well.
But the thing that I'm most proud of is how far I've come from five, six years ago, when I merged up with my co founders.
Omer (32:57.310)
All right, that wraps up part one of the interview with Aaron Epstein of Creative Market.
In part two of this interview, Aaron shares his seven strategies to help you build a a thriving online marketplace.
And so we'll go through those seven strategies and take some of the lessons that he and the Creative Market team learned about building a two sided marketplace.
