Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart.
You’re about to me a guy who’s heard me say that so many times because he’s a Mixergy listener like you. He’s an entrepreneur who had a company that basically did not do well. He ended up closing it down. I invited him here to talk about why it didn’t do well, what he learned from it, how he closed it down and how he came up with his next idea, the one that just has taken off and find out what he’s done differently with this business.
So, the company that he had to close down is called Flowtab. It offers mobile drink ordering services to nightclubs and bars and we’ll talk about what that means. After that, he went on to create HomeHero, where he is right now. You might see the logo over his shoulder. That is a fast and affordable way to find quality in-home care for seniors.
This whole shebang over here is sponsored by HostGator. If you need a hosting company, you better check out HostGator. Later on I’ll tell you why. And if you need a developer, go to Toptal.com. I’ll tell you more about them later. First, I’ve got to meet Mike. Hey, Mike.
Mike: Hey, Andrew.
Andrew: Good to talk to you. Hey, I’m actually getting better at these intros. I didn’t write down your intro and it’s just working out. You’ve heard me over the years.
Mike: Yeah. A thousand interviews and you’re nailing it.
Andrew: I am. And so are you. And you know what? Flowtab is where I wanted us to start off, but let’s get a little bit of backstory here and talk about Zing Checkout. What was that?
Mike: Sure. So, I’m in Santa Monica and I’ve lived all over. I met Net Stewart in 2011. He was an incredibly smart, passionate developer. I met him here at Santa Monica at the Coloft office. He had been consulting with this clothing company called Red Chapter Clothing. They had this problem of maintaining inventory and sales checkout process at different locations. So, initially he built this web-based online portal to keep track of inventory.
But really the bigger vision when I met him and talked about him about this was could we build a web-based point of sale? Could you use your iPad to have a point of sale and swipe customers through? Basically what Square is today was our initial conception. Back then, Square didn’t exist. So, we started working on it. We grew it out at a Santa Monica office, raised some money, moved to Austin and then eventually sold it to Bigcommerce.
Andrew: And this is a business you were running–you started just before Flowtab and you were running it concurrently with Flowtab for a bit, right?
Mike: Flowtab was really an idea I had over a while. I met Kyle, became good friends with him. It just kind of sat in your brain, almost like “Inception.” When I was working on Zing, I kept giving Kyle ideas. One thing led to another and Kyle and I ended up teaming up to build Flowtab.
Andrew: Why were you guys exchanging other ideas and spending your time on a side project when Zing is an idea that clearly made sense, right? People do need to charge customer credit cards in person, in real life. The thing was working for you. Why not double down on that instead of looking for another idea?
Mike: Yeah. At the time Kyle was really the captain of the ship. I was more or less giving him advice on the side here and there. He was really building out the first version of the product. He’s a jack of all trades, designed it, coded the first version. When he and moved to San Francisco together, we kind of had the idea cemented and then it was about how do we get it in bars, how do we actually get people using it.
Andrew: So then who was running Zing?
Mike: So, Nate took over. I left in the end of… early 2013 and Nate took over. So, I kind of remained on as an advisor. After I left, the company was sold to Bigcommerce.
Andrew: How much of that did you own?
Mike: Nate had a majority of the company. When I was there, Nate started it. He really had the idea for it with his consulting job at Red Chapter. But I had less than 15 percent when the company was sold.
Andrew: I see. So, when you have a minority share at that point, it doesn’t make sense for you to spend all day long on that. I guess in some cases it does, but I can see how your mind would wander to a brand new startup that was all yours or–what was the share split on that one, with Flowtab?
Mike: Flowtab when we started, I believe we split it pretty close to down the middle between Kyle and I.
Andrew: Who got a little bit more?
Mike: Kyle would. He took it and ran with it. When I joined, it wasn’t more than an idea and an app. But we went out. One brilliant thing we did was the first thing we did was we made a deck. We made a 10-point PDF and we printed it out and we walked in a ton of bars in LA and San Francisco and we met with owners and I told him it was done. We told them we had customers. We signed them up. When they actually wanted to get it installed, we kind of delayed. And then we actually went and built the product. That’s kind of where it was at when he and I synced up.
Andrew: That sounds really smart. That’s a way to get some feedback before you get the product. That’s a way to decide if you should even build the product in the first place. What’s one thing you learned from doing that that helped shape the product?
Mike: Man, everything. You get customers before you even build. This is kind of a larger known perception of how to start now, but back then it was like build a first version of product, go out and sell it. I don’t know why anyone would build anything before you make a few screenshots make a landing page and go out and get some customers first.
Andrew: What was the basic idea at that point? We’re talking about 2011. You’re walking in to stores with nothing but slides and an idea. What was the idea that was represented in those slides?
Mike: Sure. In San Francisco, there are 300 venues that sell alcohol–bars and nightclubs and that sort of thing, hotels. The idea is if we can use an app, everything just sort of flows through that app. People can pay, checkout, not stand in line. Basically the whole experience of paper, when you go the bar and you get the thing and you’ve got to sign it and it gets wet and you drop it–that whole thing we could kind of resolve from the bar, which at the end of the day would make them more money.
Andrew: Why?
Mike: Well, they lost a lot in the process. Every time a bartender turns around in a dark nightclub and they stare at that bright light and they fiddle with it and the other bartender comes over and helps them with it, that’s missed opportunity in cash.
Andrew: To sell to other customers.
Mike: Exactly or make drinks. So, the idea was if your bartender spends 30 percent of their time fiddling with a point of sale system, that’s 30 percent more revenue you can make.
Andrew: By the way, why were you listening to Mixergy? What were you hoping to get out of it?
Mike: Man, I love Mixergy. I’m all about it. I’ve thought about that. I think there are a lot of subtle unconscious thoughts in just how you think about different problems in listening to a lot of your conversations with people. There’s not any one particular lesson. I’m actually a Mixergy subscriber to the Premium. I’ve gone on there for a few instances for specific things I wanted to learn. But more so just listening to the interviews is awesome to get a sense for how people think of different problems.
Andrew: I feel like that’s the way it needs to be used. I know a lot of people take notes on every conversation and that’s helpful. But frankly, if you just hear how other entrepreneurs think through your problems and allow yourself to absorb those ideas, you’ll start thinking better. You’ll start thinking like the people you admire and you’ll start avoiding some of the problems that you here over and over again without making the effort of writing down notes and making sure that you actually use every single thing. You will use it if you just trust the process.
So, you were going to walk in. What was the payment process going to be like when you pitched it?
Mike: So, it was basically order on your phone. It was pretty simple in that people didn’t have to take out a credit card or take out cash or exchange anything. They just order whatever they want on the phone. It shows up on the iPad on the bar. I had a decent amount of experience understanding how payments would work on iPad. But the difficult part was every experience is different, different bars or stadiums. We went to the San Francisco Giants stadium. We went to the Oakland A’s. We talked to those guys. Every environment is challenging.
Andrew: But the idea that you had for them was a customer is going to come in, you tell them, “You don’t have to order with me. Go to our app, order it and you can pay for it there and I’ll just make the drinks for you and we can chat. But I’m not going to take your order. The app will.”
Mike: Exactly.
Andrew: The bar owners were okay with that?
Mike: Yeah. If you think about it, the original sale from the point of sale system is just that. These guys went in and they said, “Put a $3,000 computer behind your bar.” They’ve all done that. So, this was like you don’t even need a computer. We just use the computer in your customers” hands to hand over payments.
Andrew: But what about the idea that you’re now forcing the customer to download an app, enter a credit card into the app, etc. and making them do all that work before they want to get drunk or after they get drunk.
Mike: Yeah. Well, that was our responsibly. The promise to those bars was, we will–just like Uber will promise Uber drivers–it’s our responsibility as a company to market and promote that for customers. We did a lot of clever things like we partnered with Lyft. We’d go in Lyft and hand out these little promo cards and Lyft drivers would give those out because everyone that takes Lyft on the way to the bar would get a free little pull tab card.
Andrew: $5 drink card.
Mike: Give $5, get $5. So, the drivers are constantly calling us like, “Hey man, I gave out all the cards. I need some new ones.”
Andrew: Because they were getting $5 in drinks every time someone used it.
Mike: Yeah. And everyone is in the car pre-gaming. So, they love it.
Andrew: I see. So, the idea wasn’t that the bartender would have to tell the customer, “Go install this app.” But if the customer had the app, the bartender would accept it.
Mike: Exactly.
Andrew: So, how was any of this shaped by your conversations with real bar owners, with real customers?
Mike: Yeah. So, in the beginning, it was like, “How do we get people that are in the bar to use this?” But we sort of realized, “Let’s get people who are not in the bar to go into the bar for the purpose of trying it out.” I think that’s where we kind of shifted from really struggling to get people in the door
Andrew: Sorry. I’m still taking it back to before you even launched the product. You’re walking in there with vaporware, nothing but an idea and some slides. How did the conversations that you had with bar owners and real bartenders shape the product that you were imagining you were going to build?
Mike: Sure. So, I can tell you one specific example. There’s a restaurant bar here in Los Angeles, three locations and the owners name was Red. He was concerned with our integration to the point of sale system. So, that’s always a common question. How do you integrate with the payments side of things? How do you as a separate app developer send us money for the entire nightshift?
We basically developed six different ways we do that based on the six different market conditions that we would run into on the point of sale side. So, you have like the cash bars. You have the terminal bars that just use terminal. You have the ones that keep inventory. You have full point of sale systems and then you have multi-store point of sale system. They’re all different. Basically, we determined our market segmentation based on that. If we had started to build without asking those questions first, then we would have run into that wall.
Andrew: And you wouldn’t have known that you need all these situations to take into account
Mike: Got it.
Andrew: And you said sell before you create. What was the sale proposition? What were you offering them?
Mike: In hindsight it was too easy. We went in and we said, “It’s free. It’s free for you. Free for bars. Free for users.” The real idea was to have a transaction fee associated with that on the consumer side or take a percentage of sales. We never got to the point where we made significant revenue. It was about how we solve the user experience problem, which we’re most obsessed about. But those were the revenue models that we tried.
Andrew: But before, you didn’t say, “Give me money up front. We’ll go get this ready for you?” Got it.
Mike: We never did.
Andrew: One thing I noticed when I first moved to San Francisco was how many different payment processing apps a lot of restaurants have. They seem to me to be really open to just roll with your ideas and to see what works.
Mike: Yeah.
Andrew: Is that your experience too?
Mike: Yeah. You know why?
Andrew: Why?
Mike: Because when they do that, they know that there is a kickback to the restaurant to start. So, basically we, like every other app developer and entrepreneur, will go in and offer some large incentive for restaurant owners and no downside. No one goes in and says, “I’m going to charge you $100 a month.” They go in and say, “Hey, try this, it’s free. I’m just going to put it here. If orders show up, they show up. If they don’t, they don’t.” There’s really not much of a downside.
Andrew: “And I’ll give you some money just in case.”
Mike: Yeah. We did. We would go in and we’d bring our friends to try it out. We probably contributed a few thousand dollars to a few different bars around the city.
Andrew: Oh, I see. It’s not that you would just say, “Here’s the money we’re going to give you.” It wasn’t that explicit. They understood you were going to send your friends and send some customers over and you did as a way of repaying them. I see. Okay. I get it. All right. It does seem like a very friendly market to try things like that, where in other cities, I can’t imagine people would entertain the idea, let alone invite a new piece of technology into their cash register.
Mike: Yeah. There’s this sort of interesting dynamic in San Francisco where that is true, but also there’s an extremely high percentage of cash bars. So, you have this sort of bimodal customer demographic or people who are anxious to try everything almost in fear of missing out and then there are the ones who say, “We won’t try anything,” and they remain completely cash only for their entire existence.
Andrew: And I guess I get the cash only also. Avoid taxes, right?
Mike: There are a lot of those.
Andrew: So, how long does it take you to actually build the first version?
Mike: That’s a good question. It probably took us two to three months before we had something super simple that was just a web view ecommerce with items listed and you can go through and put a credit card and pay.
Andrew: That was Kyle building it out?
Mike: At that time, we both were working on it. The tough part was syncing it to an iPad. We basically sent orders to an iPad behind the bar. Our technical infrastructure, the notifications, in the first version it was so choppy that it requested information from the service of those new orders.
So, one of the craziest things we ever did was we threw an event with Thrillist and they brought in hundreds of people to this bar in Santa Monica and everyone placed orders at the same time. So, three would be no orders on the iPad and then next time it refreshed, it would be 70 orders.
Andrew: And more coming in real time.
Mike: Yeah. That was the dangers of the first version.
Andrew: I heard you used a word like catastrophe to describe it. Was it really that bad?
Mike: It was pretty bad. It made you stronger, I’ll say that. There were a lot of people pretty frustrated around it.
Andrew: I see. The customers are frustrated. The bartender must be frustrated but at the end of the night, do people forget about it after having a few drinks?
Mike: I think money solves a lot of problems. If people are frustrated because they’re not getting a drink, you can buy them a drink. It was a good problem to have. It was a high-stress situation going through the pipeline. It wasn’t like we didn’t have enough or it wasn’t working.
Andrew: Where did you get this money that you were able to buy off your problems?
Mike: In large part it was our savings. Kyle and I had saved money. I worked as an aerospace engineer for a few years in Los Angeles. He was working as a financial advisor for a while and kind of working on side projects. We had just saved up some money. For those early experiments, it probably wasn’t more than $10,000 each. But it was pretty much every penny that we had plus some.
Andrew: What were you living like in LA?
Mike: Not large at all. We split a place, even at HomeHero we were living together for a while in San Francisco with three people in a makeshift apartment. It was pretty scrappy.
Andrew: In LA, the people don’t admire you for doing that. They think you’re a little weird.
Mike: I don’t really care.
Andrew: I don’t either. You mentioned Coloft. Coloft is an office sharing space in Los Angeles. That’s where you guys got started. I’m going to do a quick sponsorship message and then we’ll go on with the rest of the story, see what happened, why you guys shut down, how you got funding and then how from all that HomeHero came up and how amazing HomeHero is today.
The sponsorship message is for Toptal. If you need a developer, go to Toptal.com. Why? Well, I know the usual ways are to go to online job boards, put your message up or hire a recruiter and have them go out and find people for you. That’s a tough process that takes a long time that requires you to spend a lot of time away from your business.
Or you can go to the freelance sites and look for some of the cheapo people and hopefully they’ll stick around, but I’ve had experiences where some people stick around for a while. Other people suddenly disappear. There isn’t a bond and there isn’t that quality that you need when you want to build a top product for a business that’s really going somewhere.
So, there’s a new approach. It’s called Toptal.com. They already screened their developers. They already have this network of developers that they have access to. You tell them what they need. They will go to this network of top developers, top three percent as chosen by their peers and then they will pick the right person for you. You get a conversation with them.
If you like that person, boom, you can get started. If you don’t, they can find someone else. I have had, in my experience, just two conversations. The first person was good. The second person was unbelievable. Good meaning a good fit for us. The second was an unbelievable fit for us. So, we hired that second person and we were able to get started with them within I think it was a day or two. That’s how it works with Toptal.
Let me ask you this, Mike. If you had 80 hours of top developer time, is there a project that you guys could use another 80 hours of developer time on or is there a new project that you would want to start on the side at HomeHero?
Mike: Yeah, definitely.
Andrew: What would it be?
Mike: Absolutely. So, very specifically, it’s the Hero Fund. So, this is something Kyle and I put together with the help of Jose and our engineering team. The mission with our company is to help families find affordable care. There are millions of families in this country, a lot of which we’ve received calls from, that can’t afford to have someone in for $18 an hour to help their senior loved one. So, we had a lot of rejection.
Andrew: That’s what you charge, $18 an hour to have someone come in and take care of their loved one?
Mike: Yeah. By comparison, the industry would be, say, $24-$25+ an hour. But even with our lower rates, a lot of people can’t afford that because it comes out to a lot of dollars per day and per week. So, the idea was we’d go home to our friends and family and we’d talk about these experiences and conversation we have with someone who served as a Navy war veteran and they couldn’t afford to have someone come in to help prepare meals or simple things.
So, we said what if we created a crowdfunding platform? Put on these stories, show a video or a picture, a few pictures of what it’s about and allow anyone in the world to contribute to this. So, we did. We called it the Hero Fund.
Right now, we’re in the process of going through legal setup and launching it. But on HeroFund.HomeHero.org is our crowdfunding platform where we’ve launched a few different campaigns and already have raised close to $10,000. We need a lot more help and sort of contribution to make this a successful, large-scale platform. But that would definitely be where I’d put some money.
Andrew: Yeah. This is the kind of project we’re talking about. You’ve got a business that’s growing. You have investors that are waiting for you to continue to grow. You have customers who want more services who want your full developer attention, but at the same time you have this need on the side that’s really important.
So, what do you do? Well, one thing you can do is go to Toptal and hire a developer. In fact, instead of going to Toptal–I’m going to do it right now–Toptal.com/Mixergy, they’re actually going to give you 80 hours of free developer time when you pay for 80. That means that you’re going to double what you pay for it. They’re going to give you an extra 80 hours. And you have a no-risk trial period for up to two weeks. I don’t know what you have to lose. You don’t even have to even sign up for this. You can just go to that URL, put in that information.
They’ll contact you and you’ll have a consultation with someone from Toptal and they’ll help you think through what you’re working on, whether or not you can even use a developer, how working with a Toptal developer would work out for you. And then if you like, you can sign up, they will give you 80 free hours of developer time and you have a two-week trial period. Two weeks–if you’re not happy, they will not bill you and they still will pay the developer. So, the developer won’t get screwed. No harm, no foul.
Mike: That’s great.
Andrew: Toptal will be out a few bucks, but you know what? They can afford it. They’re funded by Andreessen Horowitz. And Andreessen Horowitz does not fund slouches. So, you know you’ve got a good company with Toptal. Toptal.com/Mixergy. Cool.
Mike: That’s awesome.
Andrew: Yeah. It really is such a good company to work with. All right. So, you’ve got this thing. I want to continue quickly and then get into HomeHero because that’s a huge success for you guys. So, Flowtab gets built. You bring it out to the same bars that you talked to before. Do they actually follow through install it or were they just talking?
Mike: Yeah, they do.
Andrew: They do. Are they happy with the results?
Mike: They are. The trouble was getting people to come back, the challenge between the different layouts of the bars. We ended up thinking about how do we scale this into multiple cities. How do we turn this into a really big company? So, through Mike Jones was a friend of ours and founder of Science, he introduced us to Dex One, who essentially is this multi-thousand person sales organization. They agreed through months of negotiating and setting up this contract to basically push out, through a lot of their sales people, Flowtab to different cities.
Andrew: That’s an outrageous thing. So, these guys are the ones, from what I understand from you, they put the Yellow Pages on people’s doorsteps. They sell Yellow Page ads too?
Mike: You’d be blown away, Andrew, by how many people still have the Yellow Pages and receive them and look at them and there’s a 3,000-person company that goes out to small businesses and sells Yellow Page ads. They still exist.
Andrew: I am shocked, frankly, when somebody has a Yellow Page–I always just assume that it’s one big lie, frankly, that they tell storekeepers, “You might as well keep paying or you might lose some customers.” But frankly, I go to Olivia’s family and they will sometimes pull out the Yellow Pages. I don’t know why they don’t get their phone out or a computer out, but it exists. So, these guys were going to take your idea and why they’re calling up and seeing yellow page ads–
Mike: In person.
Andrew: Oh, in person?
Mike: They’re going in person. So, they’re walking in to businesses and saying, “Do you want the Yellow Pages,” but they’re also selling ancillary products. And one of the digital products they wanted to sell to increase revenue per sales person was Flowtab.
Andrew: That’s one of the things that I admire about Mike Jones. Who the hell on the planet would know, in the tech world, when to make the right introduction to who at this paper-based business?
Mike: Yeah. He’s great.
Andrew: How did you get hooked up with Mike Jones?
Mike: We sent him a cold email. I remember that distinctly. We just kept emailing him. Eventually we talked to him and got to know him and now he’s on our board and was our first investor at HomeHero.
Andrew: Flowtab he also invested?
Mike: He did not. He was an advisor to us.
Andrew: Who invested?
Mike: We had a couple smaller angels. We only raised $150,000 with Flowtab. So, it was three individuals.
Andrew: Who are they?
Mike: One was Kyle’s old boss. Two were kind of smaller friends in San Francisco.
Andrew: I see. So, not very well known angel investors.
Mike: Not at all. No.
Andrew: When did you know it wasn’t working out?
Mike: That’s a great question. Really, when we were going to bars every single night and we were trying every single thing we could think of–Kyle was on “Shark Tank,” we did this deal with Dex One, we tried so many different things. But we couldn’t get the organic growth to really start to happen.
And that’s when we started to break off and try different things and try different stadiums and try different types of venues. We looked at golf courses. We looked at everything from ordering on a boat in a yacht to setting up golf courses and stadiums. That was a really interesting learning experience in itself.
Andrew: What did you learn there?
Mike: That stadiums are challenging to sell to. I think it really honestly would have worked well if Wi-Fi connection was available. Out of the 500 stadiums in this country that over 28,000 occupancy, it’s a struggle to have that many people on Wi-Fi. But now AEG, they launch a lot of these ordering systems. So, I think we were a little too early for that.
Andrew: I do see that actually. Now when I go to AT&T Park, they want you to order from an app.
Mike: It makes so much sense, right? They know exactly where you are. They can come and deliver it.
Andrew: Right. So, you’re starting to see this thing wasn’t going right. Meanwhile, you have an idea that leads to HomeHero before you shut down Flowtab, right?
Mike: Yeah.
Andrew: How did that idea come about?
Mike: So, Kyle and I, we were living together, working together 100-hour weeks working on Flowtab and Kyle’s dad–great guy–he lives now still in Ohio as a professor at Ohio State and Kyle’s grandmother was 98 years old, still lives, and she lives in Seattle. He was mailing paper checks back and forth. At first he was trying to find a caregiver and find replacements for her to help with meal preparation and companionship.
Andrew: How do you find someone? I don’t even know. If my parents were sick, how would I even find someone for them?
Mike: Most people, by default, search on Google and ask friends. And they generally look at agencies. So there are 20,000 fragmented market homecare agencies that basically employ caregivers and then dispatch those into the home. So, generally you’ll pay a lot more for that, maybe $300, $400+ a day. Kyle’s dad didn’t want to pay that. So, he kind of went the Craigslist and word of mouth through church groups. So, he found someone and it was just a struggle, trying to send paper checks across the country. He didn’t know when they got there what they were–
Andrew: He was working with them one on one?
Mike: He would only maintain a phone connection. He was working in Ohio.
Andrew: It wasn’t through an agency. There was no one else in between them.
Mike: No.
Andrew: I see. So, that person doesn’t have Stripe, isn’t ready to start accepting credit cards.
Mike: Not at all. No. So, it was paper everything, paper checks getting mailed, text messages of what they did, no real consistency or process for finding a replacement. And eventually one of the care givers just stopped showing up and unfortunately he found out that she stole a handful of jewelry and disappeared. So, the reality is it was a really painful, violating experience and he was back to square one of, “How do I find another person to come in?”
So, he took time off and left his career at Ohio State and moved to Seattle. And this where Kyle is getting dragged in. He was saying, “Hey Kyle, come up and help me interview people and screen people.” At a two, three-person company, you just can’t afford to have person gone for weeks at a time.
Andrew: So, you guys messing around and you came up with a possible solution. What did you do?
Mike: Really, the premise, Andrew, was could we solve this with technology. We realized that a lot of the things that his dad was doing were not human necessary processes. You don’t need check in, check outs and payments back and forth and updates. You don’t need that to be done manually. So, we said, “I wonder if we could take two weeks off, build them a little simple SMS-based app to send payments back and forth and then get back to Flowtab.” The whole idea the whole time was, “Let’s put a Band-Aid on this,” so we can focus back on it.
Andrew: It was creating a solution for one person? You weren’t in the back of your heads thinking, “This could be a big idea?”
Mike: In hindsight, we weren’t thinking that until we sat down to build it. We said, “How many people have this problem?” And it was mindboggling to realize that this is a $30 billion industry of home health, another $30 billion in home care. It was eye-opening as to the problems that were so consistent. Once we really started digging into it, we couldn’t stop thinking about it.
Andrew: And how effective was the app that you guys built in two weeks?
Mike: It totally changes life. He went back to becoming a professor again. Just the simple change of having digital check-in, check-out and payments from paper checks–it sounds like a small thing, but imagine writing a paper check every single day and trying to keep track of someone across the country.
Andrew: What would you do? You guys would take his bank account information and then have a check mailed out to someone’s API, is that what it was?
Mike: We just had their ACH, their banking information? So, we can just send them–so, they would just check in with an SMS and we would interpret it, send money, see the time that they were there. So, it was really like the first version of HomeHero on a really simple thing.
Andrew: That seems pretty intense for something that’s just a solution for one person. You had to have been thinking, “This could be big. Let’s get with it.”
Mike: Yeah. Once we sat down to build it, we realized this could be much, much bigger than just solving it for his dad. His dad was our first customer on HomeHero.
Andrew: And then at what point did you say, “Flowtab is not nearly as exciting as HomeHero?”
Mike: When we had no money in the bank.
Andrew: I see.
Mike: That was really the biggest indicator.
Andrew: You know what? You’re smiling as you say it. I’ve never seen another company create this death chronicle of what happened to Flowtab. Anyone can go to Alpha.Flowtab.com.
Mike: Just Flowtab.com.
Andrew: Is it just on Flowtab.com? Okay. What I see is this really well put together timeline of how the business started, what happened when things were great and then how it fell apart. That had to have hurt for you to say, “I ran out of money. These aren’t huge investors. It’s not Mike Jones who just lost some money. It’s someone’s dad who lost money.” How painful was it when that happened?
Mike: It was tough. But I think at the same point you realize if you honestly give it everything you have and you try every different idea and you put everything you have into it, there’s no reason to feel ashamed if it doesn’t work. The whole concept of a startup is that the business model is not proven. So, the seed money was to experiment and see if we could try everything possible to make it work. And if it doesn’t, that either means you’re too early, it wasn’t well-executed. There are a number of different reasons.
But for us, we were content with our effort. The idea behind publishing our story was to this day, we’ve gotten hundreds, literally hundreds of people across the world who have started with similar ideas and have emailed us saying, “Hey, I learned so much with what you published. I’m changing it. I’m doing something different.” The amount of lives we’ve been able to touch has been well worth it.
Andrew: There’s also a great piece on TechCrunch that I missed when it was published, but I’m glad you emailed it to me. It’s really well-detailed about how things happened. But your list of lessons from it, I think, I want more information on. Like, for example, you say, “Do things that don’t scale,” is one of the lessons you took away from it. But I feel like you did that.
That’s a Paul Graham lesson where he says, “Try to talk to customers. Make them really happy on the small level. Don’t worry about how that hard work is going to scale. You can figure it out later on.” Didn’t you do that? Didn’t you walk into bars and talk to them individually and sell to them individually and creative parties for them?
Mike: Yeah. We did. It really wasn’t meant to be a list of failures. It was meant to show the history and chronicle of the adventure and the story.
Andrew: So, when you say, “One of my lessons is do things that don’t scale.” You’re almost proud that you did do it because by focusing on things that don’t scale, you’re able to avoid spending too much time on this. Is that it?
Mike: Yeah. I can honestly say that everything we put on there, it was really a reflection of the market conditions, being too early probably and then having such a fragmented customer base that it really made this business model questionable. So, that was something we realized after doing everything we did, between partnering with Lyft and Dex One and the “Shark Tank” and scaling to stadiums–all these things, none of them were a failure or done wrong. They were actually done really well, I think, in hindsight. So, the idea was could we take what we learned and share it with people?
Andrew: Okay. Is there a way for you to have avoided this beforehand? Is there a way for you to have analyzed the market before you got started building?
Mike: Great question. I don’t think so. I really don’t. I think it was so close to becoming–now, it’s a different story. Now we’re five years later. The market’s changed. But back then, I think the seed money went really well towards discovering if it was potentially scalable.
Andrew: Okay. So, you close it down. You realize HomeHero is going to be something. So, one of the things you do in the beginning is go to hospital caregiver groups and you do what with them?
Mike: We did everything. The biggest mindset we had when we started, Andrew, was learn as much as we can before we write a single line of code. So, even more so than ever before in the past, we realized we were overwhelmed with information we didn’t know.
So we spent almost four months just going and talking to caregiver meetup groups, discharge planners, social workers, past clients, everyone we could speak with in the industry to learn generally how things worked, how the payments process worked, how the insurance worked, how people find care, what the caregivers did in the homes, generally?
Andrew: How do people find care?
Mike: A lot of it now is split–
Andrew: I guess we talked about that a moment ago. Sorry. There’s a reason I’m kind of teeing it up, but I’ll save it for later. So, it’s those agencies. It’s through friends and church groups and you also said that its’ through Craigslist. I want to go back to that later on. But then when they find them, they often will just work out a one on one relationship or go through the agency and make a payment, right?
Mike: They’ll generally all work through the agency. The agency will handle payments, paper checks, time sheets and that kind of thing.
Andrew: So, if it’s the agency, it seems like that’s a solved problem, no? For agencies, you can’t do anything, right?
Mike: We’re not an agency. So, they do things very differently. There are 20,000 agencies in home care. Are your grandparents still around? Have they ever had care?
Andrew: They are dead. Yes, they–one of my grandfathers had care. He was in an old age home for a while. It was really a sad-looking place, but he was, at that point, in a sad looking state. But that was it.
Mike: That’s kind of a common reaction or common experience that people have. Me personally, same way. But I think a lot of it is the old school mentality around these agencies. Most of the owners are 55 and older. They’re handling everything on Excel Files. They’ll have a team of ten schedulers to manage 100 caregivers.
Andrew: I see what you mean. Yeah.
Mike: It may be how an old school taxi cab company would work. I think generally consolidating the supply of any market, if you have that readily accessible, if you have an efficient way to distribute job offers to that, you have a pretty effective on demand marketplace. It would be the same kind of philosophy as handy or other–
Andrew: I don’t know this about your model. You guys work with agencies where you place a caregiver from an agency and you enable the agency to interact with their customer? Is that it?
Mike: No. It’s really simple. So, if you need someone to help your mother or father, you would go to HomeHero. You would give us some information on what the condition of the person is, where they live, how many hours a week, generally your budget. We have this on a funnel online. Then we would essentially dispatch that job to all the qualified heroes in the area.
Andrew: And these are independent caregivers?
Mike: Exactly.
Andrew: Got it. I see. So, it’s not that you would work with agencies. You find those independent people. It’s like Uber for caregivers.
Mike: Sure. That works. We would compete with the agencies. So, the brick and mortar incumbents would be who we generally compete with.
Andrew: That’s what I thought. The only thing that threw me, the photos on your site–I guess they’re for show–the photo of the lady who is wearing the shirt who looks like she’s in a hospital, but now that I’m looking at it more carefully I can see she’s in someone’s home. I see. So, I was thinking you guys were working with homes also and you’re not. It’s a caregiver’s photo that I’m seeing in someone’s house.
Mike: Just in their private home.
Andrew: Got it. Okay. Interesting. All right. I’m going to do a quick sponsorship message and then we’ll see how the business continued from there. The sponsorship message is for… Where is it? It’s on the second desk in my office–for these guys, HostGator.com.
Why do I show this? Because I get emails from people that say, “What’s the name of that hosting company you talk about, Andrew?” I know there are so many hosting companies out there and you forget them because the names all run together. That’s why I’m holding up an actual gator, the blue HostGator alligator to remind you when you’re thinking about a hosting company to go to HostGator.com and if you add a /Mixergy to the end of, they’re going to take 30 percent off.
Let me ask you this, Mike. If you can start anything right now based on your experience with HomeHero and all I did was say, “Here, I’m going to hand you a hosting package.” You can host anything you want on it because HostGator will let you host just about anything. I can’t imagine any restrictions. They will let you host anything. What would you host on HostGator?
Mike: Ah, man. One idea I love is I would love for there to be a marketplace to exchange ideas in different countries.
Andrew: What do you mean?
Mike: If you see something brilliant in Korea, why would that not be published? Why is there not a marketplace to publish–maybe there is. I’m just not aware of it.
Andrew: I don’t think. I’m not aware of anyone.
Mike: I think there’s a huge lack in communication of ideas.
Andrew: What kind of idea did you see overseas that you think someone should know about?
Mike: In Korea there’s this–I used to live in Singapore and I saw this on a website. It’s basically in the bottom of a subway, they have a printed off grocery store on wallpaper and they have all the items just like you’re in a grocery store and if you like one of the items, you can go up to it and scan it and then it will have it delivered to your house automatically. That’s brilliant. Whoever was that grocery store owner, he’s an awesome entrepreneur. He went up and just printed up wallpaper and stuck it on the wall in the subway.
Andrew: Brilliant. And unless you’re in Korea, you’re not going to get to see that. Imagine if there’s a website where someone said, “Here’s this brilliant idea that I see in Korea,” and that was the kind of stuff that was one their website. I can see other entrepreneurs picking up on that saying, “Is there another grocery store that I can do this with or can I sell this as a service to grocery stores across the country?”
Mike: So, many ideas.
Andrew: What I love about this idea for a site is it’s so simple. Someone could start that up with WordPress, really easy to get up and running. You can do it up in an hour.
Mike: And HostGator.
Andrew: And HostGator, do it at HostGator with WordPress, start it up and then if it catches fire, you can start shifting it to your own CMS and really keep improving it. But you can start simply that way. Didn’t… What’s the name? Groupon–the founder of Groupon, Andrew Mason, told me that Groupon started as nothing but a WordPress site with widget.
Mike: That’s so true.
Andrew: Then he built it and built it.
Mike: One of the guys on our board is the CEO/founder of LivingSocial, Tim O’Shaughnessy, and I think they started the same way.
Andrew: Did they? Also a WordPress site?
Mike: Probably.
Andrew: You’re impressive with your connections with these guys. Tim is a hard guy to get a hold of. I remember when I researched him for an interview, he was one of those who used one of those two wheel things–Segway. He used a Segway to get to work because he saw that it was going to save him some time. It might have made him look like a douche, but he didn’t care. If it saves some time, you’ve got to go for it.
Mike: That sounds like him.
Andrew: That’s not a guy who will just hang out and be willing to…
Mike: Tim is awesome.
Andrew: Yeah. Never mind that. If you go to HostGator.com/Mixergy, they’ll take 30 percent off. You have a 45-day money back guarantee, which means if you’re not happy, you can shift away. And if you already have a site and you’re seeing that HostGator is offering so much more than your current hosting company is and maybe you’re upset with your hosting company, you should know you don’t have to stick with them. It’s so easy to switch.
All you have to do is go to HostGator.com/Mixergy. They will migrate you, give you the low prices, high uptime, unbeatable service–HostGator.com/Mixergy. And I’m grateful to them for sponsoring.
All right. Now you’ve got an idea. You’re starting to really learn what the possibilities are. I said it’s like Uber for home care. Did you guys in your head think that too?
Mike: I think generally we understood the consolidation effect of on-demand marketplaces. Uber is the most common marketplace that people use to refer to this macroeconomic shift. But there are many more. There are 40+ companies that essentially pick off Craigslist categories one by one. We realized that home care was untouched and largely unrealized from a technological infrastructure perspective. So, that was really the business appeal for us.
Andrew: You guys were doing a lot of this manually. Not much was coded up. What were some of the things you did manually in the first version? Text messaging.
Mike: Yeah. We did everything manually. We interviewed caregivers one on one. We sent people into homes and scheduled one on one. We would go into the homes and talk to clients one on one. Everything you could do as manual as possible, we did.
Andrew: How would you schedule?
Mike: They would call and say, “Hey, can we have this person come at 5:30?” And we would call the caregiver and say, “Can you come at 5:30 instead of 4:30?” They were like, “I can’t make it.” We would call another one. We did it old school style to start.
Andrew: I see, until you could get to code up something.
Mike: Yeah. I think you make a lot of assumptions when you build before learning. For instances, the number of times that people have rescheduling or we learned that caregivers generally, the income demographic is lower and they generally replace what you and I would spend on a laptop with only a smartphone.
So, there’s actually a higher number of caregivers and cleaners that have smartphones because they rely on that for their core business sourcing. And that was one of the things we learned from speaking with people instead of assuming they wouldn’t have those kinds of tools by default.
Andrew: I see. You were booking with them one on one. You were asking them to text you when they showed up on a job, text you when they were leaving, that kind of stuff too?
Mike: That was early version. That was what we did when we first launched just to learn.
Andrew: How do you find the right people? I know when we were looking for a nanny for our son, it was really tough to figure out who had what it took and who was potentially going to kill my kid. I was really scared.
Mike: There’s a lot to it. There are a lot of obvious things and then there are a lot of behavioral psychology things. When someone comes into the home, I always love this assessment, if you have a child and you’re hiring a babysitter, which we don’t do, but we’ve kind of taken a lot of the philosophy behind it–if they come into the home and they’re speaking with you and they’re talking to you and the kid is sitting on the ground and they pay no attention to the kid, it probably means they’re not in it for the love, right?
But if they come and they immediately start playing with the kid and engaging with the child, that probably means they’re a better fit. So, those little clues like that can tell you someone’s true motive.
Andrew: I’ve found that too. That’s a great example of one. Another one is when they’re really tiny babies, if they know to wash their hands as soon as they come in, that’s an indication of their care for the details. Another one was the nannies who are especially into the work would have photos of the kids that they were taking care of before or while they were looking for the next job. They would have them on their phone.
So, if I could say, “Can you tell me the person you were working for? Can I see pictures of the kids?” The ones who were really good, were good at that. So, where did you learn all this stuff? You didn’t have to know it before.
Mike: I think it’s just being attuned to that. So, we would speak to hundreds of caregivers. One thing we did in the early days was I personally went through every on demand marketplace, supplier, onboarding process there is. So, I’m an Uber driver. I’m a Lyft driver, TaskRabbit, Postmates, InstaCart, Handy–I’m on everything. I sat through every orientation.
So, I learned all these little cues that they all did. And we combined that with the psychological impact from the caregivers, like, “What makes a good caregiver?” And then we would combine the tools with the experience that we wanted to build.
Andrew: Oh wow. That’s so freaking brilliant. What’s one thing you learned from doing that?
Mike: One thing was I remember Postmates has this little clever experience where when you get into Postmates, because it’s a relatively new service, you’re not used to doing what they do. They’re kind of the first of their kind. They sit through this class. Then they have a little card sitting on your chair when you get there. On one side it’s green and it says, “I like this. I want to continue to the next step.” And on the other side it’s red. You check a box and you put it on your chair and it has your name on it and you leave.
It basically, really subtly tells the company whether you want to engage in the next step or not. So, rather than them calling you and getting to the next step, you can very simply have a, “Yes, I’d like to continue.”
Andrew: I see. It keeps people from feeling awkward about, “I don’t like this whole Postmates thing. I’ve got to get out of here.”
Mike: So, now the question is when we build our supply process, do we have an acknowledged fear or some resistance to people telling us, “Yeah, I want to continue,” or, “No, I don’t.” So, there are a little things like that that we built into everything start to finish.
Andrew: I’ve never heard of someone who did this. It’s such a basic thing to do. I can see how much value you could get out of doing it.
Mike: Actually, I wrote–I never did publish it. I should publish it. Maybe by the time this goes live I’ll have it up. It’s an analysis of each of these–
Andrew: Oh, I would love that.
Mike: I’ll send it to you. I’ll put that out and send it to you.
Andrew: Please. And we should link that up in the comments. I always wanted to go into every cult I could find to see what they do to recruit people.
Mike: Yeah.
Andrew: In fact, one of the things that we do for the Mixergy courses actually comes directly from the way cults recruit. If you go and watch someone give a cult present on–not every one, but the ones that we studied–you see a guy get up on stage and talk about how he used to be a drunk and he would fight with his wife and his job really sucked and he’s just not happy in the world, and then he discovered whoever this person is, like the Holy Yamashaka.
He talks about the Holy Yamashaka taught him one thing. And then because of that one thing, now he walked into his wife’s–he walked into the kitchen, kissed his wife, felt a new revived energy for his job and so on and life got good. And then you think, “What the hell? Who is this Yamashaka?” And then he spends some time telling you all kinds of wacky stuff about him and if you buy in, you buy in and if you don’t, no problem.
Mike: Did you sit through this?
Andrew: I went to a bunch of them.
Mike: Really?
Andrew: Yeah.
Mike: Are you a subscriber now?
Andrew: No. I’m too much of a skeptic, cynic. Even when I went to Landmark, which seems like a really good place, I just had so many questions for them that I remember the guy who was going to give a presentation entertain my questions at first. And then I had all these questions, like skeptical questions that I wanted to have answers to. He basically walked away from me. He was like, “All right, well thank you.” I just said, “This is not the place to do it. From now on, when I ask questions, I shouldn’t do it with a guy who’s about to go up on stage.”
Mike: You’re too good of an interviewer, Andrew.
Andrew: Yeah. You have to know when to ask those questions. Frankly, I could spend another year of my life just going to check out different cults.
Mike: It is interesting.
Andrew: Yeah. And it seems like you did a little bit of that. Was there anything cultish about any of these organizations that made you feel like, “They’re not just getting people to do the jobs but they’re recruiting them for a mission. Even though it’s a low-paid mission, it’s a mission and I admire how they’re getting them on board for it.”
Mike: Yeah. I think cult carries a negative connation to it. If you sort of broaden it out to spiritual believes or religion and you look at like why are there three major religions that each hold over a billion believers in a 10 billion person planet, that’s quite fragmented.
I think if you look at the characteristics of each, one you have to wholly believe and the other you have to recruit other people to come in, it kind of leads to why there are three or four major ones. I say that because I think there are a lot of psychological traits in people that you can carry over, which is kind of the community aspect of it, right? So, you can have people in relatively small pods or groups of 10 or 12 people that they all know each other and they share.
We do a similar thing where we onboard people. They each know of each other. They get to know each other and they form their own group. We call that a Hero Group. So, they can rely on each other to exchange questions and ideas. We have a platform for that. So, understanding why people associate with certain brands and why people are proud of certain brands and not others is really interesting.
Andrew: And you created your own software to allow your heroes to get to know each other on a ten-person or so basis?
Mike: Yeah. They’ll each come in sort of cohorts.
Andrew: Where did you get that idea?
Mike: We got that from Zirtual. Zirtual, when they were around, they have all of their workers in these groups. They’re all virtual workers. And they had that great idea. I remember meeting with their CTO and he explained how there’s one manager Zirtual person and they get paid higher and they manage the ten people in their group and they all rely on each other. I felt a really efficient way of managing teams of people.
Andrew: Speaking of Zirtual, Wil the guy who just bought them was over at my house Monday for takeout and we were talking about Zirtual. That guy believes in his business and in Zirtual in like a very religious way. You know him, it sounds like right?
Mike: Yes. I do.
Andrew: Wil Schroter?
Mike: I do know him. I didn’t know too much about his mentality around buying the company. I do believe in it. I think generally if you can imagine any experience, it’s probably going to exist. Another way of saying it is if you’re willing to pay for some experience, it will probably exist someday and to have a virtual workforce, it makes a lot of sense.
Andrew: Are you in San Francisco or in LA?
Mike: Right now I’m in Santa Monica.
Andrew: Okay. All right. So now you have this idea. How long does it take you to code this up?
Mike: Forever. It never stops.
Andrew: What about the first version, the one that you were actually able to use?
Mike: The first version was built all on Twilio. So, it was all SMS-based when we first started. They would text in when they got there, text in when they left. We would submit an ACH transfer through Stripe. So, Stripe and Twilio were our core frameworks.
Andrew: And it was all manual, you guys sitting there and handling it?
Mike: Yeah. What we did when we first started, that would come through in an email. Every day we had people that worked, start/stop. We’d get a daily email and we would go through and we would just submit payments every single day. We would have eight or ten just so it would start and we had Erin, this person in the Philippines who is amazing and she ran this process for us. And we just kind of let that slip and then we worked on other things.
We came back probably a month later and she was getting super long emails and spending hours a day and submitting these payments. So, we build where it hurts. So, that was kind of evolution of our billing process.
Andrew: That’s one of the first things that you built?
Mike: Yeah, billing and payments is super important.
Andrew: Building where it hurts makes a lot of sense. I love that phrase. Do you have a little bit more time? I know we’re running over.
Mike: Definitely. Yeah.
Andrew: Okay. One thing that you told our producer is that a big lesson you learned is you have to educate your customer to pay close attention to the wording you use. What do you mean by that?
Mike: In our marketing I would say it’s important to give perspective to how you attract people, almost like we were talking about in cults and such, people interpret words differently. Even between your experience of the word cult and mine, it may mean something completely different from a listener’s voice or a listener’s interpretation of it.
Andrew: Yeah. You said it had negative connotations I thought, “Oh, I didn’t think of that. Of course.”
Mike: And I think the words, especially on copy of things that you use, they’re all going to have different associations with different people. People have different backgrounds. Especially when you deal with a demographic as different as caregiving and as sort of complex as homecare, you can’t say on the homepage, “Find a Hero,” and expect people to know what that means. So, we’re really attuned to what different words mean. It’s interesting. I think a lot of business, more so than it probably gets credit is really a psychological question.
Andrew: Do you have an example of how you do that? Your homepage actually does say, “Heroes for hire as the headline.” So, how are you using language in a way that’s unexpected or you wouldn’t have expected if you hadn’t talked to people one on one?
Mike: I think it’s picturing who actually uses the site. So, if you have people come to the site that know exactly what they’re there for, you can kind of be more generalistic. But in redesigning our product now, we’re thinking about how much do you walk people through the experience or do you just assume that they know what home care is. Even when I mention to you, your interpretation of it was different. I think that’s really the idea, how much you explain to people versus assume they know.
Andrew: We were talking a little bit about marketing. Here’s what I’ve been seeing. You guys run a lot of ads in Craigslist under the healthcare section for jobs, right?
Mike: We run ads a lot of places. Yeah.
Andrew: It looks like you’re also recruiting customers from craigslist, no? Am I misunderstanding it?
Mike: Not really. No. People who would go through Craigslist really are looking for really inexpensive, cash-based–it’s kind of a really fragmented channel. So, we don’t really go through Craigslist.
Andrew: So then where are you getting your customers?
Mike: In Los Angeles, we hit a million hours of care. We’re at 1,500 heroes in LA. That is largely through word of mouth. When we launch a new city, we kind of go through and launch with advertising. We just try to get word of mouth of up in that city. There are a lot of traditional homecare sites in Yelp and Google and that sort of thing.
Andrew: Yelp and Google has worked for you. I’ve seen your ads on Google. I didn’t look on Yelp yet. The reason why bring that up is when I look at your traffic, you guys are getting traffic from Product Hunt and Science Inc., that’s Mike Jones’ investment company, and TechCrunch. That’s not really where you’re getting your customers, right? The Product Hunt user, I don’t even think tends to have a parent who’s ready for home care, right? They’re not buying your stuff and they’re not in that mindset at the time.
Mike: We just did a $20 million series A and when we did that, that probably brought in a lot of tech readers and traffic. So, that’s probably what that is.
Andrew: So, are those two places your top sources, Yelp and Google?
Mike: Yeah. If you think about it, if I literally told Andrew, “Go find care for your grandmother.” Where would you go? It’s like, “What do I do?” You’ll probably type it in Google. You’ll probably see Yelp, similar to going to any restaurant or something, you’re going to look at the consumer reviews. Those are the two biggest platforms for that.
Andrew: Are you doing any direct mail?
Mike: We don’t.
Andrew: No Yellow Pages?
Mike: No Yellow Pages. No. We try a bunch of stuff.
Andrew: Before we started, I was asking for something that showed how big the company was, some metric and investment is a good metric, but it doesn’t show how well the business is doing. It just shows how good you are at raising money. So, you said, “A million hours of care so far.” And to me that didn’t mean much. But then you said, “Look, Andrew, you can do the math yourself and try to get a sense of where we are.” It’s an average of $18 an hour, right? Is that what it costs?
Mike: It varies, but for shorter-term, that’s the hourly rate.
Andrew: Okay. And you’ve done a million hours. That comes out to roughly $18 million. It probably would be a little bit less, especially if people are paying for a day. Oh no, it’s actually more for a day, right?
Mike: No. It would a price break as you increase the number of hours.
Andrew: Oh, a day will actually get someone 24 hours. A day doesn’t mean 8 hours.
Mike: It varies. It could be 8. It could be a full day. People have different conditions. It depends on the situation of the client, what they need. But both are offered and they have different prices associated with it. So, on average, we take a 15 percent fee, similar to what Airbnb would take when they have their payment transactions. That gives you a rough idea. And the TechCrunch article, I agreed to not just say what our revenue is, but that gives you a kind of a good idea as to some background on the finances.
Andrew: So, if we’re looking at $18 an hour at a million hours, that comes down $18 million times 15 percent, $2.7 million comes to you guys as your revenue.
Mike: That’s what that article wrote.
Andrew: That’s what that would come to. Wow. That’s impressive.
Mike: That math sounds correct.
Andrew: When Mike invested in this company and not in the other one, was it a good signal to you that you were onto something?
Mike: Yeah, Mike’s awesome. I think he really understood–he helped build DogVacay, which is the world’s largest marketplace for dog hosting. He really understood marketplace companies and is really excited by them still today. So, when we talked to him and presented this idea, he was like, “Let’s do it.”
Science rolls with a $50k convertible note month over month. So, we learned for a few months, started building, started getting traction. Then we worked with Chamath. We brought him on as an investor at Social Capital and then off to the races. Now we’re in our own office and almost 30 people strong.
Andrew: How do you know–it’s Tim O’Shaughnessy from LivingSocial and Mike Jones–how do you know these people?
Mike: Each from their other. Mike introduced us to a few people, one of which was Chamath. Chamath really wanted to work with us. His father had gone through–I think he had COPD. He’s from Canada.
One of his secretaries, literally the week before we met him had to fly to, I think it was Boston, to take care of her father who had a caregiver drop him in a home. She just left Chamath. She was like, “I’m going to take care of this senior home care program.” And then we meet him a week later and we’re like, “Hey, we’re the on-demand marketplace to solve this senior care problem.”
He just immediately got it. He funds a lot of healthcare startups. I think from his perspective, we became a really attractive distribution platform. So, if we’re successful, we’re going to have contacts with millions of people in the home, which is one of the most difficult distribution channels going direct to consumer. So, if there are really cool apps in technology to come down the pike, we can help push those out.
Andrew: What did you do to win–I keep going back to Mike Jones because I happen to know him because he was so influential for you. What did you do to get him to respect you as an entrepreneur when your business wasn’t doing that well and when he wasn’t excited enough about it to invest in it or to introduce you to his friends for investment. What was it about you that made him want to stay connected with you and help you out?
Mike: As much as I’d like to say it was something else, it was probably daily updates. We would send him a lot of emails. I’m not saying this is the best way to do it, but this is how we did it. We worked super hard at Flowtab and we would accomplish a lot in a short amount of time and we would email him every time we accomplished something.
I think we did it every day or every few days or every week. We’d send updates to potential investors we had. We kind of built a reputation with them as being really hard and thorough and creative. That helped in our negotiations.
Andrew: I get that. And then he gets to see a lot of progress. I remember him saying that once, that when he’s an investor/advisor in a company, he likes to get the updates a lot from the companies. I remember Otis Chandler, the founder of Goodreads hearing that and saying, “He’s an investor in my company and I never send him updates because I don’t want to bother him with too much information,” and that helped turn in around, I believe, actually.
Mike: By default, you’re not bothering someone until they tell you you’re bothering them.
Andrew: I don’t’ know. They could still be filtering your stuff to go into their spam folder.
Mike: Who cares? It doesn’t cost anything to add one person.
Andrew: Yeah. It doesn’t. Frankly, if it goes into archive, it doesn’t matter because then when they search for you in the future, they can see all the progress you’ve made. I know that’s happened to me with guests here on Mixergy. I might have subscribed to their mailing list over the years and just had it automatically get archived. But when I do the interview, boom, it’s right there and I can get a sense of all they’ve done.
Mike: We still do that. Actually, Jason Calacanis is an investor as well, and we are actually next week at Scale Conference about this exact thing. This was one of the biggest things he noticed about our company is that we send these updates so frequently and so thoroughly that he pushes out to all his startups now. We did a presentation up in SF about this and how we sort of think about it. I think that’s really positively received from their perspective.
Andrew: I admire the hell out of what you guys have built with HomeHero, largely because it’s the kind of thing that is needed that no one else thinks about. We don’t think about healthcare or home care as tech entrepreneurs. We think more about, frankly, bars. This is something that has much more potentially to impact the world and much less competition because no one was thinking about it and man, you guys are doing it so well. It’s impressive to see how far you’ve come.
Mike: Thanks, Andrew.
Andrew: You bet. Thanks for coming on here and doing this interview.
Mike: Yeah. I really enjoyed it.
Andrew: The website is HomeHero.org. Go check it out now. Frankly, keep an eye on them over the years. I feel like there’s something really big here and I’m so lucky to have you on here to talk about it. My hosting company of choice, the one that I recommend is HostGator. Go to HostGator.com/Mixergy or if you need a developer, go to Toptal.com/Mixergy.
Thanks for doing this interview.
Mike: Thanks, Andrew.
Andrew: You bet. Thank you all for being a part of it. Bye.
