Andrew Forman is the founder and CEO of Givz, an e-commerce marketing platform that provides a platform for brands and merchants to offer a replacement to traditional discounts. He worked in investment banking and was the treasurer of a non-profit before starting his own business combining the two – a social impact tech startup.
How I Work, Episode 28 with Andrew Forman (Givz)
Andrew joins Josh Becerra in episode 28 of How I Work to discuss the long term effects of discounts on your business and how they may actually be hurting more than helping. He goes into depth on how deals are changing, and how to weave social impact into your business plan in a genuine and authentic way. Plus:
- Aligning interests: Match your company’s goals to your individual’s goals
- The shift from third party data to first party data
- “Go find a problem and fix it” – the advice that got him to where he is today
Learn more about Andrew Forman and Givz: https://www.givz.com/
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Transcription: How I Work, Episode 28 (Andrew Forman, Givz)
Josh Becerra: Hello this is Josh Becerra and this is our next episode of How I Work. I’m here with Andrew Forman. Thanks for being here, Andrew.
Andrew Forman: Thanks so much for having me, Josh. Excited to be here.
Josh: Yes, so Andrew is the founder and CEO of Givz, prior to Givz, Andrew spent six years in investment banking. He was the treasurer of a nonprofit organization. You have an MBA from Harvard Business School, BA in Mathematics and Economics from Hamilton College. You’re a smart guy, you live in New York, proud dad of three, a 3-year-old daughter, and a 1-year-old son, and you’re still trying to make time for recreational sports. Good on you. Thanks so much for being here.
Andrew: Again, thanks for having me. Excited to be here.
Josh: Yes. I love, your story and going from being in investment banking to nonprofit and now in social impact businesses, can you, just tell us a little bit more about that story?
Andrew: Yes, absolutely. I graduated from Hamilton as you mentioned, I came out and I was like, ‘Okay, math major, econ major,” so I was trying to create a finance ask major out of a liberal arts college. I said, “All right, what opens the most amount of doors?”I said, “All right, investment banking is where I can probably make the most money coming out of college and go anywhere from after your two years in banking,” but then, I just didn’t know what I wanted to do. Didn’t know what I wanted to do and ended up in banking for six years.
At that point, you’re like, “Are you a career lifetime banker?” “I don’t know, I like the work,” especially once I got to the new organization that wasn’t just a bulge bracket firm, it was more entrepreneurial. I thought we were adding a lot of value to our clients and then, but we were still just making money out of money or selling companies that were already doing pretty well, but making sure that we got the best possible price for them and really helping the entrepreneurs that built that business to make sure that they positioned their business the best for sale.
We knew all the companies that they could sell to, and so I really do think that investment bankers add a ton of value for the entrepreneur that is selling their business. In terms of social impact, not a lot going on there. You’re really just making more money out of it.
Josh: You’re missing a little meaning?
Andrew: Yes, definitely missing a little meaning on my end. I was also simultaneously running a nonprofit, so I was doing nights, late nights, and weekends on a nonprofit and saying like, “Okay, this is like the meaning portion of my life. Then the rest of the time was just, the work portion of my life.” I was like, “It would be really cool if I could combine those two things.”
One company that we were selling in my work life in particular, that had unbelievable EBIDA margins, they were the most profitable company I’d ever seen in terms of margin percentage, like 60, 70% margins, bottom line margins, EBIDA margins and they were doing work in the Middle East screening, background screening folks, which is a commoditized business here in the US but over there, it was not commoditized.
They had the sole database that they had created from scratch by sending people to different locations to see if, in fact, this was a real school where engineers learned how to engineer or if it was just a shack in the middle of nowhere and people were being fake engineers or coming in as fake doctors or fake pilots. You could see how that would actually like people lost their lives because people were fake engineers building buildings that were collapsing in 2005, 2006, et cetera, et cetera. These guys built a business off of saving people’s lives but also making a ton of money while doing it and that was the inspiration for me.
The CEO of that company, I got to work very closely with him to sell his business a couple of times over, and he was like, “Man, go back to business school.” He wrote my letter of recommendation to go to HBS and find a problem and fix it. I go back to business school, I was thinking about my time as a nonprofit treasurer in New York City, and how hard it was to get deals done with actual brands and companies. Even though I knew people at those companies that were high up at those companies that wanted to make this happen, there was still so much red tape. I was like, “There’s got to be a better way because there was value to be added on both sides,” right?
Josh: For sure.
Andrew: Even a couple of $1,000 meant the world to the tiny nonprofit that I was on. The 2000 people email list that I had that was engaged in New York really could have meant something to a brand where-
Andrew: –they’d happily donate $3,000 and be part of like first of all, a good movement, but second of all, get brand exposure to my email list, et cetera, et cetera. I was trying to think of like, “How do we make this all happen?” I started Givz right out of business school and went through a couple of iterations, but went through the last pivot about 18 months ago, 18 months, two years ago now, and found what we’re actually supposed to be doing, which is donating.
Josh: Why don’t you tell people a little bit about these incentives to support donations for, yes?
Andrew: Yes, thanks. We now run donation incentives which basically are reasons for people to buy now. Every brand is looking to move away from discounts. We know that discounts work in some sense in terms of getting people to buy now, but we also now know that people that buy on discounts rarely come back, or they’ll never come back at full price. They’re actually some of your worst customers are the ones that come in initially through discounts.
How do we move away from discounts and how do we weave in social impact in a genuine and authentic way because the consumer is demanding this and so that’s where donation incentives come in, where you can say something like, ”Hey, spend over $100,000 on our site today, we’ll give you $10 to give to a charity that you care about.” It’s amazing how many people will add a couple of extra items to their cart to get over the $100,000 mark.
You see your average order value go up and then you give them $10 to give to a charity of your choice. This is not asking them to donate an extra $10, you’re giving them $10. Now, again from the business perspective, this is much more capital efficient than the discount for a number of reasons which we’ll talk about later.
Josh: Let’s dig in the discounts a little bit. You’re not a fan of discounts and these incentives seem to be a better way to do it. Talk a little bit more about why you think discounts really hurt companies.
Andrew: You can now see it. It had been something that people had felt, people were like, “Oh, like you’re like JCPenney and you’re going out of business because nobody’s ever buying anything at full price at JCPenney. It’s just like that’s why it’s going out of business.” Then people are like, “Oh, Apple is the pinnacle because you never get Apple products discounted and you’re just always trained to pay full price.”
People qualitatively were like, “Okay, we know that discounts are bad but now, there’s a bunch of apps out there, if you’re running the shop like D2C shop [unintelligible 00:07:22], there’s a couple of apps out there one in particular Peel Insights where you drop in all of your data and you can see that people that came in on Black Friday, Cyber Monday, a year ago, they paid 50% off. They paid 50% of what [unintelligible 00:07:38].
Josh: They never came back.
Andrew: They never came back. The people that came in and paid even if they got a 10% discount or something in September, October, or even December after Black Friday, Cyber Monday, those people have come back multiple times and paid full price or paid another 10% off and their lifetime value is so much larger. You can actually just see the impact on the business from a quantitative perspective. I’m a numbers guy and math guy so that is the number one thing that slaps me across the face like, ”Hey, you have to be really careful about these steep discounts and what the long-term effect is going to be on your brand.”
Josh: Don’t you think it’s also like a mindset thing? There are people who they’re just discount people. They won’t buy anything unless they can find a coupon or something.
Andrew: Oh, yes.
Josh: They’re like, or they find something they want to buy, and then they spend hours trying to find where can they get the discount or the coupon. I do think that there are people who are more loyal to the coupon or the discount than they are to any sort of brand, wouldn’t you say?
Andrew: Absolutely. Those are not necessarily the people you want to be targeting. You want to form the relationships and buying the people that are not like that [chuckles] because those people are just going to move on. They’re going to hop from brand to brand exactly as you said, the next deal, the next deal and that’s how they roll and that’s fine. Those people are going to be out there. If they happen to come across your side at some point and purchase, great.
Realistically, there’s a lot of people out there that want to be associated with a good brand. They want to feel like they’re getting a good deal. The definition of a good deal has changed in 2022 as it was in 2002. Let alone late 1900s where people were saying like, ”Hey, a deal back then was a discount.” That was it. Discount equals deal. Now, a deal can certainly be something like a donation incentive. It’s like, ”Hey, like when I bought my new sheets for my bed, I spent $300 on the sheets, but you know what? They gave me 60 bucks to give to any charity that I wanted to give to. I actually gave it to my best friend’s charity,” et cetera, cetera, that’s a deal all of a sudden, it’s a different world we live.
Josh: It makes you feel different. It taps into a different motivation than get myself a discount for sure.
Andrew: Exactly, exactly. People want to feel good and maybe they haven’t outright donated. Like people are always like, “Oh, I talked [unintelligible 00:10:06]to that.” Like, “Oh, yes, I should donate more, I should do more,” but here’s an easy way to buy that item that you wanted to buy anyway but feel good about it and give money to a charity that you care about.
Josh: Cool. I’ve always been a fan of the social impact businesses, been paying attention to it for a while. I think like in my mind, TOMS shoes. Like you buy a pair of shoes-
Andrew: [unintelligible 00:10:30], yes.
Josh: -they give a pair of shoes kind of thing and that social impact was embedded in their business model.
Josh: Most businesses don’t really have it embedded so if do you really think that businesses that don’t have it embedded in their business model can still make that impact?
Andrew: It’s a great question and yes, I do, but I think you have to go about it the right way. The big issue that brands run into is all of a sudden, it’s like they’ve never cared about anything but it’s Pride Month and they want to try to sell some more stuff so they lean into Pride Month all of a sudden. People will call them out on that on the internet. I’m like, “Okay [unintelligible 00:11:11].”
Josh: “We just launched our new Rainbow product.”
Andrew: Yes, right, right.
Josh: Bad, boo. [chuckles]
Andrew: It’s crazy because they are trying to, obviously, they’re trying to sell things but they’re also trying to do some good. I hate when people are booing that. That said, you want to try to avoid that because there are going to be people out there that do that. The way that we’ve built our business is to actually say, “Hey, let the customer decide.” If you don’t have something built in like TOMS shoes, or even if you do quite frankly, but especially if you don’t, start a program now that encourages people to spend more on your site and then let them choose what is most important to them.
You stand for your customers which every brand [unintelligible 00:11:57] should be standing for their customers, that is the key in this day and age. What Josh cares about is different than what Andrew cares about, is different than what Lauren cares about, and different than what Katie cares about. You should tell each of them, “Hey, Josh, Andrew, Lauren, and Katie, we care about what each of you individually care about, and in fact, when you spend $100 on our site, you get $10 to give to whatever you care about Josh and whatever you care about Andrew,” and so you can donate to something, I can donate to something completely different.
The brand is going to actually support you in that and they’re putting their money where their mouth is and that’s how brands can start to get into this without having it embedded in the beginning of their [unintelligible 00:12:39].
Josh: Sure. Yes, I think it’s really cool because you’re basically aligning your brand’s interests with each individual’s interests. I think anytime brands can do that, they’re setting themselves up for success. One thing that now that you’ve started this, that you have, is like a long list of people like me and what are the causes and issues that we actually care about most. There’s value in that, of course, but that also brings up questions around privacy. How are you tackling the privacy side of things or what kind of impacts is that having on your business?
Andrew: Yes, so for us, so privacy right now, obviously, huge topic with iOS 14 and Google talking about taking away third-party cookies, all this focus on privacy is making Facebook Ads more expensive. It’s making TikTok ads more, it’s targeting people, just more expensive. The information that you have on people is less and less and less as a brand so you need to start to get this information for yourself. You need to have this as zero-party or first-party data so that you can use it because third-party data is starting to go away. With Givz, brands can actually go in, say, “Hey, here’s $10 to give to a charity that you care about,” and now, they learn exactly what Josh cares about and that’s their own, they now own that.
Josh: That’s becoming their first-party data?
Andrew: That’s becoming their first-party data, that’s right. With us, that’s their first-party data. Now, we also have access to that on the Givz side of things and eventually, we will turn it over to the consumer side where we’ll say, “Hey guys, like you guys have shopped, here’s a profile of all the money that you’ve donated to all the different charities. If you guys want to continue to shop at brands where you can support your favorite charity, here’s the list of all the brands.” Eventually, we’ll go there but right now, we’re really just keeping that information secure, encrypted off to the side, and really letting the brands do their thing right now.
Josh: Yes, that’s good. It’s definitely a changing environment, to say the least. Yes, we in digital marketing, are definitely trying to push brands to use their own first-party data because, yes, third-party data is drying up for sure.
Josh: Man, I love this conversation. I love what you’re doing with Givz. We’re running out of time.
Josh: One of the questions that I like to end on, or follow up with is just around your inspiration, maybe there’s some thought leaders that have either pushed you in this direction or that today you’re listening to, podcasts, books you’re reading. Can you tell us, or the audience a little bit about who’s challenging your thinking or inspiring you today?
Andrew: Yes. I’d have to give credit where credit’s due in the first place, pulling me out of investment banking, bringing me into the start-up world, two crucial people there. One being the CEO and a mentor of mine, who I sold his company, he ended up being in my ear saying, “Hey, go to business school, start something,” et cetera, et cetera, but then really my wife, and this may sound cheesy, but my wife, she is an absolute rock star. She had started her own company out of her senior year dorm room in college, sold that business, now is on the investor side of things, and just created to launch her own BC fund.
She showed me that it’s possible, that there’s other things out there not just the “safe” investment banking route. I got to give credit where credit is due there. In terms of public figures, and books that I’m reading, I always recommend The Hard Thing About Hard Things by Ben Horowitz. I just, I’d have to go back and re-read that book from time to time because things are hard.
Josh: This stuff’s hard. [chuckles]
Andrew: It’s really freaking hard.
Andrew: I think that’s the best thing. I’m like, “All right, don’t fix what’s not broken.” I read that book, and it just helps me. That’s my go-to piece there. Then whenever people ask me, “Oh, if you want to have dinner with somebody,” the first time I did an interview, maybe it was a couple of years ago, and they said, “Hey, If we’re going to tag somebody who might respond, who might actually respond like that’s a public figure, who would you want to get lunch with?” I said, “Who’s going to respond and who’d be interesting? Mark Cuban.” [chuckles]
Josh: [unintelligible 00:17:35].
Andrew: Because he’s super successful, owns a basketball team, which I feel a lot of guys’ dreams, and I love sports. I was like, “I would love to get lunch with him.” Now I always say him and we try to tag him and stuff, and he never responds but it is-
Josh: [unintelligible 00:17:53].
Andrew: -apparently even Kobe emailed him, he will respond so, one day.
Josh: Yes. There you go. Well, that’s awesome. I love how you bring it back to your mentors, and to your wife, and your personal relationships. I do think that this stuff is hard, and if you don’t have people like that in your lives that continuously support you, and push you, it’s not an easy thing to do on your own. Kudos to you for everything that you’re accomplishing with Givz. I think it’s super cool. I really appreciate you taking the time today to be my guest on How I work.
Josh: Thanks so much for having me. Really appreciate it.