Startup Spotlight - SQUADS
All Things Venture #074
Hey Everyone! We’ve got a lot of new people reading All Things Venture for the first time this week so I wanted to take a second to introduce myself. My name is Dez. I’m an early stage investor at FirstMark Capital where we back founders looking to build the next generation of category defining companies. My goal, and frankly my job, is to do everything and anything I can that helps move the needle for founders.
Over two years ago at the beginning of the pandemic, before I was working in venture, I started this newsletter to do just that. I wanted to provide founders with an opportunity to tell their story to an audience. An audience of like minded, curious, and ambitious people, and 74 articles later - that’s what we have going here. It’s pretty neat, and I’m thankful for everyone who is along for the ride. All Things Venture is always going to be about learning in public, sharing candid stories, and honest perspective in a way that helps all of us build, learn, and grow. We’ll have some hot takes, we’ll have some humor, and we’ll probably have some sadness too, but that’s the broad spectrum of a life well lived.
So with that intro out of the way - today, we are going to talk with Kendall Hope Tucker, the founder of SQUADS. Kendall is a second time founder, had a successful exit with her first B2B company, went viral on TikTok, and is now all in at the intersection of the creator economy and Web3. I am really excited about sharing this interview as I think it will be fascinating for anyone with A) a healthy degree of skepticism about Web3 and Crypto B) an interest in the next iteration of monetization for creators C) a need for a little inspiration this AM on just grinding it out, making your own luck, and being confident in yourself.
As always everyone, let’s dive right in.
Kendall, great to meet you. Can you tell us a little bit about Squads, what you're building, and how you got there?
Likewise! Well, first, a little bit, I guess, on my background. I started and sold a company called Knoq. I sold it in December of 2020, and I moved to Puerto Rico right afterwards. And in Puerto Rico, I met all these people, who were really involved with crypto and web3. And I was like, "Oh my God, this is so exciting." I was unemployed, and so I was spending a lot of time investing and, honestly, finding myself. I also had this crazy experience where I made a TikTok account that went viral, and I got about 80,000 followers in, like, a weekend.
That experience opened up this entirely different world of artists and internet creators. It was totally new, so I ended up flying to LA and becoming friends with a bunch of creators and managers. While I was doing that, I was also learning more about the web3 community, which I felt was all about monetization and could help a lot of creators. So I started asking my creator friends - I was like, "Why aren't you doing social token stuff? What does the future look like when there are more Patreon competitors?"
And creators were like, "Well, we don't know what MetaMask is." These creators didn't have Binance accounts and they were scared that NFTs might be scams. The most important things to creators are their reputations and their fans. The social token projects were not understanding that.
After hearing all of that, I started talking to my co-founder from my last company - he's this amazing technologist - and we were like, "It feels like there's this market arbitrage opportunity where you could build a platform where people could get upside from supporting their favorite creators." We wanted people to get real value from being part of it, not just an opportunity for a token to go up in value. Fans want to have video calls with creators. They like behind-the-scenes content, follow-backs, direct messages, all sorts of things. They also like being rewarded for supporting a creator starting when they’re small. So these were the beginning ideas of Squads, and now we're working with Mia Khalifa, Rubi Rose, DeSean Jackson and other amazing people. It's been a fast journey!
So before we dive deeper into Squads, could you give some context on Knoq and what it was like to build and sell a startup during a pandemic?
Knoq was an enterprise B2B sales tool. We aggregated data to make recommendations on how to successfully do in-person sales. We built Knoq for 5 years and we were at about $250,000 of monthly revenue with 65 employees before COVID struck.
In March of 2020, I still remember one of my investors calling me and he was like, "This disease is gonna be really bad for your company." And I was like, "is this disease even real?" (looking back, oof)
Then COVID just hit really fast. It impacted all of the companies using our platform, so we had to renegotiate with them. It really hurt our business, so we pivoted to selling data, but I wasn't really comfortable with it. Luckily, we had this, long-standing acquisition offer on the table. So I went to my board, and I was like, "Yo, I think the right thing to do, for our team, more so than anyone else, is to sell the company."
So we decided to run a process. We ended up getting three offers and we sold to a company here in Puerto Rico. And selling a company, especially selling your first company it's really devastating
because that's, like, your whole identity, especially because I started it so young. So I spent almost all of 2021 trying to figure out who I was and what I cared about. I didn't think I'd go back into startups that fast, but we found the thing we're excited about, and, thought someone's gonna win the creator space, and so we're like, "Fuck yeah, it’ll be us.”
Haha so that's a good segway. Rubi, Desean, Mia Khalifa - they're all what I would call "yacht" or "yacht-adjacent" people/creators. Not a ton of creators fit in that bucket, so can you unpack more of what it's been like to build in web3 so far? And add your perspective on whether or not web3 is the type of solution that is really just going to perpetuate the existing paradigm in the creator economy today - meaning a small amount of people making a large amount of money, or is it going to widen the aperture and bring more people into the money making tent?
Yeah. So web3 is really important. And I think it's also been perverted by people who say that they're building web3 when they're not actually distributing ownership and governance across large flocks of people. But even with that said, just as a reminder, in Web2, anytime a creator posts on Instagram or TikTok, the platform owns that art. And, they're allowed to do anything they want with it. Which is just ridiculous. And so each of these platforms have been built on the backs of creators and are not creator-owned; they're not fan-owned. So when we think about web3 and the future of Squads, it's interesting in that-- like, you said, like, Mia and DeSean are all yacht-type people. Rubi has 3.6 million followers. Like, she's not massive. She is incredibly cool and, like, incredibly up-and-coming - I love her; she's such a good rapper, but we're already seeing that, like, it's less about how big a creator's fanbase is and more about how engaged they are. And so, famously, there's that idea that if someone has 1,000 super-fans who each pay them 100 bucks a year, that’s a livable salary. Rubi already made $100,000 in her first two months on the app because her fans love her.
She's made $100K on Squads?
Yeah and then Faith Ordway has less than 1 million followers, and she's made $40,000. And so she's been saying that she might not ever have to do brand deals again, and she can just focus on making art and connecting with her fans. Alyssa Kulani is a lot smaller. She's our newest creator. She's been on the app for about two weeks. She has about 300,000 followers, I think. So she's a micro-creator, is how we think about it. And she's made $5,000 so far. But this isn't just about making money either, for some of these creators it just means so much like, I've seen creators cry on calls because they get to actually meet their fans. It's personal. It's important.
Can you help the readers understand what they could buy from their favorite creator on Squads? As well as help them understand where the upside for fans gets generated on Squads?
Yeah. So, fans buy creator coins. So let's say you love Jack Wright. You can buy a Jack coin. The Jack coin gets you access to content and experiences. Experiences are gated by owning 1 or more coins. Rubi gated a video call with 20 coins recently. We had another creator, who gated something with only 2 coins. The point is though, you don't spend those coins. When there's an experience or content, those coins freeze. And they either unfreeze over time or you can pay to unfreeze them faster. And then you can also resell your coin. At some point, someone could be like, "All right. I don't want my coin anymore," or, "It's, like, worth a lot more than it used to be; I can sell it." That's cool, but what's more exciting is the opportunity to reward super-fans for, like, really, truly supporting their favorite artists. So we haven't shipped this feature yet, but we're gonna do something where-- like, let's say, a creator, posted a new TikTok, and she's, like to her fans, "Hey, remember to like and share it." If you do that using the TikTok SDK, we can actually give each of those fans a little bit of Squads-cash or that creator's coin. That means creators can really thank their fans for supporting them.
Fans can earn from helping their favorite creators succeed. We're building a full ecosystem.
Are you building on Ethereum or a different chain?
We’re building on Polygon (which yes, is EVM-compatible).
Got it, got it. And can you help us think through, or give us your perspective on how you think through competition? You could view Patreon as a direct competitor. You could video Cameo as a direct competitor. You could view Royal, Audius, or Decent all as competitors. So help us understand how you see the world.
Yeah. We definitely don't consider ourselves competitive with Royal; I love that team. And it's different, right? Like, we're helping creators monetize their communities, not, like, share a portion of streaming. The way we think about competition is through, like a 2x2 matrix. You have speculation versus utility on one axis and then centralization versus decentralization on the other axis. So if you're speculating on only the price going up, which is a lot of the social token stuff, then you're, not getting any utility. So that's like, DeSo or Rally, and some of the other ones. On the "is it centralized or decentralized? it's really just a question of, are you really allowing ownership and upside for fans and creators or are you not? And so if you are, it's a lot of the speculative platforms, and if you're not, you're talking Patreon, Cameo, etc. So if you think about that from a 2x2 perspective, there's this huge opportunity zone which is like, "How do you drive decentralized ownership as well as utility?" So we are firmly planting our flag there.
Yeah. How do you think about building Squads? And specifically, how do you think about building the culture of your team?
Great question. Mike and I worked together for a long time. He's an amazing engineering leader. He brought on Damian, who's, like, the third, really, core member of our founding team. They had worked together before I started with Mike. We have a tremendous amount of respect for each other and we lead by giving feedback and asking for feedback every single week. When you start with a team that's inherently kind to each other, and encourages feedback, the culture grows naturally from there.
So you've been able to raise money for two different companies. As an investor, I know how difficult that process can be. Could you help anyone who is a first-time founder think about what it really means to go through a fund-raising process?
Yeah. I think the biggest thing first-time founders should understand - and I didn't know this when I was a first-time founder - is, like, you should be pitching and building relationships with more experienced founders. It's the number one most helpful thing. Once I finally figured that out and got really, really close to founders two stages ahead of me, first of all, they almost all ended up investing in my company. More importantly, they all became really good friends. On top of that, it's very hard to go back to an investor who turns you down, but it's much easier to have a shit pitch and do it with a founder who's gonna help you fix it in real time. Because even when an investor's, like, "I just wanna a quick conversation," they're judging you. It's not a bad thing; it's their job. So you wanna be sharp when you get on the phone, or whatever, when you meet an investor. And then, this is terrible advice, but, I guess, something that just comes with time, is, like-- it's, it's all about sales, and sales is just confidence. You're gonna get that confidence through reps. If you can fake it, that's great. If not, then figure out how to get yourself confident. There's a lot of people who have raised probably with less than you have.
100%, one of the things that I tell founders is, "Don't disqualify yourself. Let other people disqualify you. Operate with the confidence that you're supposed to be in that room you're supposed to be in that meeting because, you are." Okay so last question, what role does serendipity play in your life?
I think people make their own luck. Like, obviously, you can be born richer. You can have famous parents or what have you, but you kinda have to take what you were given and then just build up your own luck. Like what you said, you having this newsletter helped you get a job at Firstmark. I'm not surprised at all by that, right? Like, I'm sure you're super impressive and went to great schools, but there's a ton of people that I went to Columbia with who are still, like, "Oh, I went to an Ivy." And you're like," All right, but you're 30. Like, -
Yeah. No one cares.
Yeah. And so it's just about putting yourself out there or doing the work. It totally matters what your skillset is but for me -- my TikTok's nice. It's definitely helped me build a company. But I actually like Twitter better. It just feels more natural to me to fire off a rogue thought. I've made extremely good friends through Twitter. When I wanna fund-raise, I just ping my Twitter friends, uh, and I'm like, "Yo, like, I'm opening a new round. Who should I talk to?"
Gotta love it. I joke around sometimes how we’re all one DM, or cold email away from changing our lives. In Kendall’s case, she’s a tweet away from raising millions of dollars. In any event, that’s it for this week folks. Have a fantastic weekend.
Oh and send All Things Venture to your homies. I’ll love you forever