#RedefineGifting Podcast with Erik Marks and Simeon Cathey, Founders of TisBest Philanthropy

SPEAKERS
Nicole Donnelly, Erik Marks, Simeon Cathey

In this episode of the #RedefineGifting podcast, TisBest’s Nicole Donnelly speaks with Erik Marks and Simeon Cathey, founders of TisBest Philanthropy. They reminisce about how their shared vision, to make the world a better place through the simple act of giving, came to life.

Learn how these two entrepreneurs from different business backgrounds combined their unique skill sets to launch what is now the #1 ranked charity gift card on the market.

I hope you enjoy this conversation. Until next time, thank you for listening!

*available on Apple, Spotify, and most podcast players 🙂

https://captivate.fm/redefinegifting/

Nicole Donnelly 0:20
Welcome to this episode, the founders’ story of the #redefinegifting Podcast. I’m here with Erik Marks and Simeon Cathey, who are the co-founders of TisBest. And so this is a special occasion to get these two together on a call. I don’t think I’ve had that yet, and I really wanted to know where the heart of this came from. When you were young, Simeon, what was the first kind of philanthropic or charitable activity that you witnessed? It could be something that a parent did or neighbor or friend that started you on this path, even from a little seedling.

Simeon Cathey 1:07
I think the first memory I have that really made me understand what giving charitably kind of meant or felt like, I think I was about eight years old, and it was back before I used to only sing in the shower or in the car. I was in the choir at the baptist church and we did some caroling. We went to the old folks’ home and there were all these people in wheelchairs and some people couldn’t talk and there were people who had mental disabilities. I remember we walked in, we stood there and we started caroling in front of all these people, and I just remember being very uncomfortable, not really understanding why we were there and watching people’s faces just light up. And I realized that we weren’t really giving much, but we were sharing some energy in that space. I showed up there going, “Mom, why do I have to do this?“ and I left there feeling like wow, there was something there, there really was something there that was important. I wasn’t really quite sure exactly what, but I definitely felt it.

Nicole Donnelly 2:17
Thank you. Erik, what about you?

Erik Marks 2:21
I didn’t start that young, I have to say. I was pretty focused on my career as a lawyer, and I wasn’t, to be honest, focused on philanthropy and charity. I was raised in Berkeley, California, so I was raised very much in a liberal background with an awareness of the needs of others, but I didn’t have my eyes open to charity, the way Simeon just described, until later in life. I had some personal troubles I went through and I took some time away from work. There’s a guy at work I ran with every day and he was saying “Well what are you going to do during your time away?” and I described things like traveling and fishing and skiing. He said, “Well, have you thought about helping other people?” It was that one comment from a guy on a run that changed the trajectory in my life. Because my answer was no. Well, what would that look like? He talked to me about some of the charitable work he’d done through his church. And somehow I got hooked in with the woman who was running mission trips at the church I was going to at the time. I made an appointment with her and she said that they had a trip leaving in three weeks to Romania to work with orphans. I didn’t have kids and I had no experience working with orphans and I didn’t even know where Romania was exactly. They had been working on this trip for six months and she said, “But you’re sitting here before me today. It seems like you’re meant to go on this trip. Why don’t you come?” and I went and I worked with orphans in Romania and that was how I got started and in caring about philanthropy and charity.

Nicole Donnelly 4:04
And how did you feel after that experience?

Eric Marks 4:06
It was eye opening for me. Like I said I had been pretty focused on my career as a lawyer, but I came back from that and I wanted to help other people. And I realized that I didn’t need to go to Romania to do that. I then started volunteering at Union Gospel Mission, which of course is one of our featured charities on TisBest today. It was right down the street from my office. My office was right near a questionable part of town and UGM was down the street. So I’d walk down there and work in their legal clinic and help people who were trying to turn their lives around. That was really meaningful. We really made a difference. Those were people who usually had drug and alcohol problems and had spent six months in the UGM program turning themselves around. And our task now is to help them clear up their past legal problems — do things like restore their drivers’ licenses to get convictions off their record, if we could, and help them get back to where they could move forward with getting a job and getting on with their lives. So that was my next step. Then I had the opportunity to work at a construction waste recycling company a friend of mine was starting and I had the opportunity to help him get that started. Believe it or not it was actually hard to recycle construction waste in the city of Seattle back then, due to regulations, and we worked and got Seattle’s first construction waste recycling facility started. That was a for-profit business.

Nicole Donnelly 5:44
When was that, what year?

Erik Marks 5:46
Well, gosh, I don’t know — probably around early 2000s. I came out of that, and at that point I was questioning whether the rest of my career was going to be in law — and it wasn’t, ultimately. But that was before the term social entrepreneur existed in the world – that term came along later. As I came out of that effort to start that construction waste recycling company, I decided that I wanted my next project to be a business type enterprise that made the world better for having operated. So those were my words I wrote down on my personal piece of paper that I was using to track what my next step was going to be. And there were a lot of ideas that went onto that piece of paper. In fact now that piece of paper has over 50 ideas, but one of them has really come fully to life. It was number 27 and it was the idea for charity gift cards. 

Nicole Donnelly 6:48
Excellent. Simeon, I imagine if you did the singing at a young age, you probably participated in a lot of other activities as you were growing up. What fills the gap between then and where Erik just left off? 

Simeon Cathey 7:18
It transformed into kind of a leadership quality that I experienced. So wherever I went, and whatever job I was in, I always found ways to look around me and see where people were struggling. The first real solid experience of that was when I was in the Marine Corps and I was in boot camp. There were some people who just really struggled to learn how to march, to do more than two pushups to get their uniform ironed properly. We had one hour a day that we could use to shower and write letters home. They were trying to teach us that the weakest link will make the group fail. So I’d spend that hour every day, during the 13 weeks of boot camp, finding the people who struggled in different areas. I pulled them aside and I’d teach them how to iron and I’d show them how to march. The reward for that was when they put me in a leadership position. They made me the guide of the platoon, and that wasn’t my intent, but that was my reward, and as a team, we all grew together. That’s just kind of been my experience through life at Microsoft, building SharePoint. In my own personal company I became an entrepreneur and started building technology of my own. That’s where I think I really started realizing the influence of that kind of leadership and helping people out, was in my own little silo. And that’s actually where I got involved with TisBest, during that realization that it felt good to help people, but it was in this really siloed way, and focused around business.

Nicole Donnelly 9:08
As I understand you were at Microsoft when you started talking about TisBest.

Simeon Cathey 9:14
Well it was just after Microsoft. We were building this product, SharePoint, a lot of people use it all over the world. Part of my job was to figure out if we were building the right technology for real people, for real businesses. I realized I could be more valuable outside the company, so I left Microsoft to try to bring the customer voice back to Microsoft and started building a little team and business really started to grow.  At one point we were just growing like crazy and we were working 70-80 hours a week. I think there were 10 of us working out of my house, you know the typical kind of stories you hear about the 2000s with the big internet bubble. One day I thought, I feel very disconnected from my community. I feel like there’s a world out there that’s just kind of flying by, without us noticing, because we’re so focused, and we’ve been doing that sprint for about three months. So I wrote an email to all my employees and I said I feel like we’re just missing the connection. I don’t really know my neighbors. The only people I know are the people at Starbucks that make my drinks. I know their names and that’s about it. It’d be good to connect so does anybody have any ideas? To my surprise every single employee wrote back and said, yes we agree and here’s an idea. So we had ideas like let’s go to the soup kitchen and feed the hungry; let’s go to the children’s hospital and bring them games or stuffed animals; let’s do things like that and make an impact. Initially I was amazed that everybody felt the same way I felt. But then I sat everybody down and said guys listen, we can all do something individual. We can each go do something to help everybody out. But we’re technologists, we’re engineers. What if we could build something that other people could use to scale giving and helping the world? I didn’t really know what that was, but it was just a thought in my head that I just kept coming back to. If we have these really specific skills, what can we do to really scale giving? That’s when I ran into Erik marks.

Nicole Donnelly 11:24
Where did you guys run into each other?

Erik Marks 11:26
I had put number 27 on my list there, which was the charity gift card idea for helping the world be a better place through business. And I was trying to find a technology company to partner with. I could do the financial piece, I could do the legal piece, but I was not a technology guy. I was networking and it turns out that someone I knew was a partner in Simeon’s company at that point in time and introduced me to Simeon and his team – and we were able to get going on this. Simeon and I both remember those times we would work full days at work. And then I would drive to his house and sometimes get there around eight or nine at night. I would always arrive with an excellent bottle of red wine. When that bottle was done, usually around midnight or 1:00 a.m. we were done with our work –  but we had knocked out a piece of TisBest.

Nicole Donnelly 12:17
How long did it take you to build the first MVP? (minimum viable product)

Erik Marks 12:22
Aren’t we still working on it, Simeon? [Erik laughs]

[Nicole, Erik and Simeon laugh]

Simeon Cathey 12:24
The first working version of TisBest actually was physical. You would go into a retail store and buy a physical copy, like a regular greeting card. It would have a code on it and you would go to the website, put in that code and then you could choose from around 250 charities at the time to distribute that money.

Erik Marks 12:48
So that’s a really interesting part of our history that I’ve forgotten. It was the first six months. We launched TisBest as you know it today as a website, where you can buy your charity gift card, around October of 2007. So just in time for the holidays. But before that, in about March of ‘07, we launched a prior product ineffectively and the reason was there was a patent. In 1999 — right at the beginning of the massive internet boom that ended in the 2001 bust — there was a patent issued by the patent office that protected the issuing of a unique code associated with a charitable donation where that code could be used to direct the charitable donation to a certain charity. It turns out the PTO office issued patents for all sorts of things if it was done over the internet. So it turns out that right before 2000, PTO office issued hundreds of patents for “I’ll sell gum over the internet”  and they’ll give you a patent. Of course that was not sustainable in hindsight, and they started striking those patents down. And so in ‘07 there was a patent that protected this, issued in ‘99. In early ‘07, as Simeon said, we decided to work around the patent by issuing the code, not through the internet, but on the face of the card sold in a greeting card store. So we were setting ourselves up to be a greeting card company. 

We didn’t want to look quite like all the greeting cards on the rack. The way these greeting cards worked, they had a code in them, take the code to the internet, enter the code and then associate the money with the card – we called it a giving card. We didn’t want the cards to look like regular greeting cards. So I hired a woman who was a seamstress and an expert in fabrics, and in a borrowed land, i.e. free space from a friend, we figured out how to make greeting cards out of fabrics. They were elegant and beautiful and had sequins on them and in our TisBest office we still have them in our sort of history case. 

I put them in local stores, and we sold them, and I remember, still, the first customer I got to buy one. It was amazing. Simeon had built this website where this person could go and then load the money on the card. Then we sold more. We didn’t sell a lot, but we made the split points of sale display because as it turned out you couldn’t sufficiently explain this concept in a point of sale environment. I could do it if I was in the store standing there, but once I walked away no matter how much information we provided that wasn’t going to work. You needed a website to convey this information. So we were scratching our heads, trying to figure out what to do next. How are we gonna overcome this obstacle about communication? And two things happened right on the same day. One is I was sharing the challenge with the woman who was our seamstress and working with the fabric expert, and she said, “Oh, that’s easy. You just tell them it’s just like a gift card but rather than buying stuff in a store, they get to give the money to charity.” So it was the first time that our product concept was associated with the gift card idea and really, unfortunately for her, it was the woman who no longer had a job because she shared this idea with me. And number two, remarkably on the same day the patent office struck down that 1999 patent — that now we could issue the codes over the internet — we immediately decided okay, we’re doing gift cards and we’re doing gift cards with codes on them over the internet. I don’t know when that was Simeon, but we had to build that thing in a hurry.

Simeon Cathey 16:23
We did. Yes, that was why we had the late nights with the red wine.

Erik Marks 16:27
Yeah, that was the time we must have learned. It must have been August when we learned that and we launched two months later I think, something like that. The first year there were no physical cards. The first year of ‘07 you could email a charity gift card to someone, or you could have us email it to you and then you’d forward it through your email to the other person.

Nicole Donnelly 16:50
So, how did that first giving season go? 

Erik Marks 16:55
[Laughing] It was the best of times and the worst of times. 

Simeon Cathey 17:01
If you imagine driving your car down the road and having your mechanic, on a skateboard, holding on to the door next to it with the hood open — that’s pretty much what it was like. We were working on the engine while we were barreling down the road.

Erik Marks 17:19
Oh my God what a year! It would have been a small year, but we hired a PR firm to try to spread the word of what we’d created. These are folks that we still work with today, C+C, here in Seattle. They focus on mission-driven concepts and they got us some remarkable coverage. They got us in the New York Times, they got us in the Wall Street Journal —  in things called magazines which mattered back then — Newsweek, Time. We were on Good Morning America and NPR. NPR was what made the difference. They put us on the Morning Edition which means we ran three times in every time zone. The piece they did had a nine year old girl talking about charity gift cards, why she liked them and why she liked giving them to her friends. The website traffic spiked and sales were doubling day after day. We went from a few thousand dollars a day to tens of thousands of dollars a day within a week. As Simeon said he was trying to work on the website under the hood while we were doing this. That was challenging enough but then, then the worst of times happened.

It was December 17 and I got a call at four in the afternoon from our credit card processor and they said we’re not processing credit cards after 6 p.m. today. And I said what the heck, guys. They said we sent you a letter. We hadn’t received a letter. [They said] we tried to call you and left messages. We got no notices so basically, we got effectively two hours notice. They shut down our credit card processing. As it turned out, the person who had sold us that service — and I’m not going to name the name of this company as much as I would love to — but the gentleman who was a salesperson for them had defrauded us. That company prohibited selling gift cards across its platform. When I submitted the form that describes what we’re doing and I wrote charity gift cards he asked me if I could describe what we were doing in a different language. So I did, but didn’t use the term gift card — so I changed the language. I said something like charitable giving, and he was fine with that. There were terms and conditions that were supposed to appear on the page — he had deleted those from the form. So, we had no idea that we weren’t supposed to be using them to sell charity gift cards. When they saw our sales doubling or tripling day after day, it threw up the automatic flags in their system and they looked at what we were doing and they just, without thinking about it, shut us down. They had 90% of our revenues that year. By the way we were able to get going about 72 hours later. A bank which I will mention, Washington Trust Bank, who I bank with now, and banked a little bit with them back then. They really stepped up to the plate, did the right thing, and got us online again and I’ll always respect them for that. We got going, we got close, but this other company, the bad actor here, they had 90% of the money we’d taken in that year. We needed to give that money away to charity, it wasn’t even our money. I fought for four months to get that money out of them. It was incredible how hard it was. They were entirely in the wrong. We ultimately decided not to go after them legally, because we really wanted to focus instead on our product and our opportunity. That was very much the right decision, but what a year that was.

Nicole Donnelly 20:53
Yeah, a lot of lessons learned. 

Erik Marks 20:56
Oh my gosh, yeah.

Nicole Donnelly 21:00
Okay so that was 2007 when everything was starting. How much money has TisBest given to charity to date?

Erik Marks 21:13
Over $20 million, right Simeon?

Simeon Cathey 21:15
That’s right. It’s an interesting question when you ask it that way, too, because we’re a donor advised fund. So the purchaser of the gift is really the person who puts the money in the account, and the recipient is the one who chooses where that money goes. So at the end of the day, the gift purchaser really is giving the money to charity, and we’re helping. We’re getting advisement from the recipient on where to send that money to. Once in a while we run a special program for one of our corporate customers. There will be money leftover and then we’ll distribute that, but the total amount of money that’s been through our system in the last 13 years, given out to charitable organizations, is just a little over $27 million at this time.

Erik Marks 22:08
As a little bit of context, our first-year revenues in ‘07 were $350,000. Our revenues today are generally five to $10 million a year, in revenues/donations, same thing.

Nicole Donnelly 22:22
This is one nonprofit that’s run like a business.

Simeon Cathey 22:28
If you think about who we’re competing with, it’s the big online retailers throughout the world. Science proves that people enjoy giving a gift that then that person gives to somebody else and there are some great videos and studies out there that talk about that. There are some links to those on our website, but you still have to get in front of people and make them aware that there is a gift option. That it’s a really special gift that does good for the world. So, we have to run it like a for-profit business in that respect. We have to get in front of and compete with the Amazons of the world and the Starbucks gift cards and all those things out there.

Erik Marks 23:13
Well Nicole, that was one thing that we had to learn about ourselves. We created this thing from scratch. The charity gift card actually didn’t exist. We created that term through the history I described a couple of minutes ago. Year two we were trying to figure out who we were so we could tell people why we were a good idea. We had to figure out we weren’t really in the philanthropy and charity space. Philanthropy and charity is ultimately the very core to what we do, but we’re in the gift-giving space. We are important when someone has a birthday and you want to give them a birthday gift or when an employee he has an anniversary. As Simeon said, our competitors are not the charities —  even the word competitor isn’t right there. We are a charity legally, but we are not a charity in terms of the space we operate in. We are a gift company.  When people choose to buy a TisBest charity gift card and give it as a gift, they’re doing that instead of choosing a bottle of wine or a box of chocolates or, God forbid, an Amazon gift card. Those are the companies we compete against. Those are for-profit companies run by people who are focused on, and very skilled at, business operations and that’s how we need to compete and how we see ourselves.

Nicole Donnelly 24:38
It is and that is an important part because when I first met the team, you had sales people. That’s  different terminology than other nonprofits would use. You don’t have sales people at a nonprofit and so it’s kind of funny because as you know, I come from a business background and volunteering with a lot of charities. What’s so nice about everyone who works with TisBest or for TisBest, is there’s the same heart of charity. And then there’s the need to have it run like a business. So there’s the business side that’s needed as well as the heart side of things. I think both of you bring the business acumen to it and the heart to make a difference. When we can connect with other business leaders to give them this message of redefining gifting, like our hashtag #redefinegifting, give more gifts of good and less stuff, that’s where TisBest can really make a difference. So, I want to ask you where you see the future of TisBest and the legacy of the organization, as it’s going from consumer focused to business focused, and how businesses are so much more concerned about their social efforts. There’s been a real shift in that in the last few years and so many more people are getting on board with a business that needs to have a relationship with a nonprofit or do good in the world. Can each of you speak to that and how you see what’s next for TisBest and what’s going to cause more people to give broadly?

Simeon Cathey 26:40
I’ll start. What we saw this last year and a half with COVID really changed people’s perspectives. Just in the last six or seven years, the way companies feel about [and take some responsibility in the world] and have their CSR programs. We saw a big shift about people wanting to do something and giving, or gifting rather, has always been a big part of business. People take people out on the boondoggles. At trade shows, they give people swag and there’s always this kind of “gifting to connect people” idea. Now with the cultural and social responsibility that people feel, and then the lock down where people felt like they couldn’t really get out and make a difference personally, those two things combined have made a big difference. 

We’ve got a lot of feedback from businesses. In fact, we just did a big survey and we found that businesses love the solution that we provide. They also love that when they purchase TisBest charity gift cards and they give those out, it’s tax-deductible. They get a tax-deductible receipt so it hits their bottom line in a positive way also. So they can feel good about that and also having a customized experience. The direction we’re going that we’ve implemented from a technology and an experience perspective, is a real customized experience —  really personalizing it and branding it with the businesses’ brand, their message —  so that when they give out the TisBestCharity Gift Cards to their vendors or their employees for appreciation or their customers. When any of the recipients come to the website, they’re going to have a completely branded experience – so really personalizing. You can almost think of TisBest as having microsites for different businesses and that business can now have a  business-giving website, but powered by TisBest. So instead of a business having to go build and create all these programs, we’ve already pre-built it. They can just put it in the brands, the message and deliver that. So that’s one direction we’ve been going, and that’s been working really well. Getting the word out has been getting easier as well. We’ve been partnering with some influencers who have been going out and giving and creating awareness as well. So that’s  one direction we’re really looking at going. I think the other thing that I’ll mention just briefly, is we’ve had some international interest and we’re not necessarily planning to offer TisBest, our platform, as an international solution but we have been sort of mentoring some other countries that want to do something similar.

Nicole Donnelly 29:30
Thank you.
Erik?

Erik Marks 29:32
You know, Simeon runs the show these days so his answer counts more than mine. I think Simeon said it quite well. Holding course, the one thing I see is an organization that’s changing from being tiny to being small. Simeon, how many employees do we have now? 

Simeon Cathey 29:54
I think we’re at eight staff now.

Erik Marks 29:54
Eight full-time and then a couple of peripheral contractor types.

Simeon Cathey 30:00
During the holidays we bring in another four or five people.

Erik Marks 30:03
That’s quite a bit larger than it has been mostly historically. So Simeon’s leading the charge in terms of evolving us from being tiny to being small and the changes in staffing and COVID is a big challenge there, too. Our product is evolving as Simeon says but the organization is also evolving too, as this demand comes in and we want to be ready to meet it. We are a gift solution. We also are somewhat a financial institution – not institution, but “institutionette.” We have financial responsibility to our customers, our donors and our participants to get it right. When they ask us to give their money to someone, it’s very important to us that that money goes to that place in the right amount every time. So making sure that we handle that correctly as we grow is really important to us too.

Nicole Donnelly 31:09
Are there some different areas of growth with TisBest? That is the business customers coming and buying the charity gift cards as opposed to anything else. We’ve seen a really big increase in that this year already. And we definitely saw a big increase in that last year. Another thing that we have seen work well, is having wealthy people use TisBest as their personal giving vehicle. So somebody who has  a million dollars can spread their money and use TisBest to facilitate the giving. So when they give someone a $30,000 gift to go to charity, they’re not just giving a gift on behalf of somebody — that person actually gets to choose where the money goes. I know in a lot of the conversations I’ve had, most people have a little niche. Erik and Simeon, we were just talking before this. Erik has environmental concerns, and that’s where he wants to put his money. Simeon might have different ones. I have a lot of women and children’s causes. If somebody gives me money to give away, I would want to give it to women and children’s [organizations.] But Erik just donated, let’s say on my behalf $10,000 to some ocean cleanup project. We can facilitate the kind of giving that really connects with the recipient. So if you give me a gift and I can choose a women and children’s kind of organization or horse hospice, or whatever it is, then, then it creates a better connection between the two of us and you’re really acknowledging my need to support women and children, as opposed to just push your agenda forward. So it creates these more meaningful connections and meaningful gifts. I know financial advisors and wealth managers, once they get the cards and start giving them to their clients they don’t stop, because the feedback is so good. I feel that the emotional connection created in client gifts is a huge one for TisBest going forward too.

Simeon Cathey 33:23
I want to tell you a really short story, Nicole. Speaking of business customers, I’ve gone to a lot of trade shows. I’ve spoken at a lot of trade shows and I used to shove all the little doodads in my backpack and I’d take them home to my daughter and she played with them for a little while. When I brought her home a charity gift card, a TIsBest Charity Gift Card, we sat down and she got to learn about philanthropy and I got to learn about what she really cares about in a different way. When she was actually asked what she would give money to, it was a whole new experience. We get those thank you notes from people all the time. That particular experience where you’re doing trade shows, and now with remote trade shows, we’re seeing a big rise in that — what a special gift. If I try to give you those little, squishy stress balls with my logo on it, and your kid plays with it, yeah you’re going to see my logo once in a while. But bringing home a TisBest Charity Gift Card, and going through the process of looking at the different charities — whether they’re your local charities; maybe somebody you know works for a charity; or maybe it’s something you really care about; you know, you really love your cat and you want to give to animals — that’s not just helping an organization that helps the world, but it’s also learning philanthropy.  Learning philanthropy at that young age, or at any age, is a really powerful experience for people and the more that we come together and help each other out — whether it’s through helping organizations help people, or helping people give to organizations, it’s just such a huge impact. We’re seeing such a spike in interest there, when given this option.

Erik Marks 35:05
I’d love to jump in here a little bit, too, and pick up on that — about what excites me about TisBest and why I was so excited to make this come to life from the very beginning. It’s not just about raising money for women and children, or pets or the ocean or whatever. That’s very important and we’re very proud of doing that and it puts a big smile on our face. Equally important for me is it changes the conversations that people in the world are having. Rather than talking about the bottle of wine they gave each other, or the box of chocolates, instead they’re talking about how to help women and children, how to save the ocean, how to feed people. We aren’t going to save our oceans. We aren’t going to help women and children and we are not going to feed people until we all start talking about it a lot more.

Nicole Donnelly 35:56
I agree. That’s why we’re talking about it here, so perfect way to wrap it up. I interviewed Larry [Snyder] on Saturday and he said, “You know, everyone can do something.” It starts with those conversations. It could be small donations and gifts, but everybody can do something and that’s exactly what you were both just talking about. So, thank you for your time today. I think we’ll wrap it up here and I can’t wait to see how this season goes. 

Erik Marks 36:32
Thanks Nicole. 

Simeon Cathey 36:34

Nicole Donnelly 36:35
Thank you, Erik. Thanks, Simeon.