Transparent Collective: Founder Live with Kevin Dedner of Hurdle
Transparent Collective is a non-profit that breaks down barriers that notably target underrepresented founders at the beginnings of their startup career by preparing founders to fundraise, connecting investors to first-class entrepreneurs, and contributing to their overall development.
We’ve worked with over 50 startups who have collectively raised more than 47 million in Seed funding and recently we started a new series called “Founders Lives.” During a Founder Live, we chat with a different Transparent Collective alum to learn about their founder’s journey, what they have discovered along the way, and any advice they have for other aspiring entrepreneurs.
In our most recent event, our partner James Norman had the privilege of speaking with Transparent Collective alum Kevin Dedner about his startup, Hurdle, which raised 5 million in seed funding. Kevin realized that a lack of resources and ingrained stigmas associated with seeking mental health help often unduly affect minorities, so he created Hurdle. The health startup aims to solve this problem by providing a digital platform with a comprehensive suite of teletherapy services specifically designed for diverse populations.
In this conversation, Kevin speaks about his journey, how he came up with the idea for Hurdle, and the exact steps he took to raise a 5 million Seed. We also open it up to questions from other founders in the audience including Sean Green and Harold Hughes.
Even though Kevin had a background in Public Health, he had never considered anything in the digital health sphere. It wasn’t until he experienced depression firsthand and the difficulties of finding a suitable therapist that the idea for Hurdle emerged.
“My personal experience with depression and the things I had been learning in public health about mental health, it sort of all collided, and that’s when our company was born.”
The beginning of the journey wasn’t smooth sailing and there were many times where he questioned if this was the right path for him. “The truth is, James, I went looking for jobs at times and I got all the way to interviews with the CEO or VP, and they would say “no.” So I just got to the space where it was very clear to me that this is what I’m supposed to do in life, and I just buckled down and I found a way to push myself through those difficult days, but it was hard.”
Ultimately, Kevin pitched to 280 investors before he found any semblance of success. In that process, he learned how to weed out potential investors who were just taking meetings to see what ideas were in the marketplace to those who were truly serious about funding. “I got really skilled. “Are you writing checks right now?”, “How much money is left in your fund? What’s in your reserve?” Those are super important questions that honestly, you don’t know to ask those questions out the gate. You have to sort of hit your head up against the wall several times before you figure that out.”
It took Kevin over two years to raise the 5 million in seed money, but he’s so thankful that he put in the time and effort. He’s even more grateful to the Transparent Collective for their guidance and support in getting him to his goal. “They taught me everything I know, like the foundation things about fundraising. I will forever be grateful for that.”
Kevin’s main piece of advice for other founders looking to fundraise: “People will tell you you can’t do it, you can’t raise money, and you’re going to have all of these things working against you, but if you believe that you have an answer to a problem and only you have that answer, that should be motivation to keep trying and not let anyone discourage you.”
To check out the full conversation, read the transcription below.
James:
So Kevin, just tell us where you’re from and what really started the idea.
Kevin:
Well, I’m originally from Little Rock, Arkansas. I live in Washington DC now. Several years ago, my background is in public health and I had a successful public health consulting practice. Things were going really well but then things got really overwhelming, and I worked myself into mental exhaustion. That exhaustion led to depression. When I realized that I was depressed, I started looking for therapists, and I ultimately saw three therapists before I found a therapist who I could really connect with. I thought I would go back to growing my consulting practice when I was asked the question about my co-founder, and that question was had I ever considered doing anything in digital health. That moment, my personal experience with depression and the things I had been learning in public health about mental health, it sort of all collided, and that’s when our company was born.
James:
Got you, got you. So how long ago was that?
Kevin:
So the first meeting that I sat down with my co-founder was on October the 24th of 2017. We kicked the idea around for the rest of the year, and then in January 2018, we started the company.
James:
Got you, got you. So not too long ago, but definitely almost four years in the game now. I mean I’m assuming no tech background or anything. Just, you wanted to try and build a solution.
Kevin:
Yeah, no technical background. I started out incredibly naïve about this whole space.
James:
Yeah, I think a lot of us start there. It’s like most of us being the first generation of Black folks to be in this kind of space.
James:
So with that said, curious: how’d you land a technical co-founder? You have the idea, you want to pursue it. How’d you start finding people to put around you to start pursuing that idea?
Kevin:
Yeah, that’s where it gets a little bit more nuanced for me. So my co-founder, essentially he’s a great guy. We’re still very much connected today, but really, he was an investor and an investor who wanted to play an active role in helping to start a company. When we first started, James, I was so naïve. I thought that he knew everything that needed to be done. That wasn’t true, and it took me probably six or seven months in to realize that if I really wanted the company to work, that number one, people were not going to give me money if I had other things going, and then number two, I also realized that I didn’t really have the skillset, nor did he have the skillset, that would bring money in. So the truth is for me, I basically struggled through the next two years or year-and-a-half trying to just get my foot in.
Kevin:
It was in 2019, we started delivering services that spring. Really testing out our model, and really trying to put some meat to the business, and then last year when the pandemic happened and after the death of George Floyd, the business started to really solidify, but the truth is, I mean it was hard.
I went for a couple of years without an income, but I believed in the idea and I believed that I could attract the right people, and there were people who were attracted to the vision and the mission, and they were very supportive to the point that they helped build a foundation that ultimately attracted the funding.
James:
Cool, cool. So before we even get to the funding, I mean that’s so far down the line, backing up into, you were building an application that was at first called Henry Health, and I think when we met, the focus and the story was around the issues and mental health for Black people specifically. As you landed on that, which we both know is a market but might be hard for others to understand, how was that received, and then how did you start managing through the storytelling of that to get to where you’re going now? Yeah, how’d that land in the market when you first put it out there?
Kevin:
Wow, that’s a really loaded question. I want to kind of preface it by saying that, because I know that there are probably people who’ll listen to our conversation that are working on solutions that are very specific to meeting the needs of certain populations, whether it be Black people or LGBTQ people, but we start, as you really pointed out, narrowly focused on Black men.
Candidly, that was a real struggle, not only with white investors, but even Black investors thought that the market was too niche. James, I have a public health background, so my training forces me to always segment populations and think about who’s at the greatest risk. In fact, like we’re seeing this play out right now. We see seniors are getting their shots first. People with other health problems have access to their shots. That’s like a real simple public health model.
Kevin:
So our focus on Black men was not because we only wanted to serve Black men. I knew in my mind that the business would eventually need to evolve, but we had made this correlation with health outcomes for Black men and the stress related to untreated mental health issues. That was the founding of our company, but honestly, we struggled to tell that story. We struggled to get people to really understand it. People were sort of questioning the business model. Could it be a B2C model? Could it be a B2B model? I mean we really struggled to get traction.
Kevin:
Early last year, we had started to do some work on our brand to try to make the brand more inclusive, and the thinking there was that we would build communities, and the first community that we would build would be for Black men. I really struggled through that because I wanted to try to find a way to honor our founding and stay true to the original mission of the company. I felt like that was a really good concession that I made, and then the pandemic hit right as we were introducing a broader diversity to the company. Then after the pandemic, the death of George Floyd really was this new inflection that showed us that we were always where we needed to be. That really kind of put us back into the position that we got to open back up conversations with investors. Some had even said “no” before then. By the end of last summer, we had signed a term sheet and were on our way, but it was a real difficult journey.
Kevin:
I think a lot of people would’ve quit along the way.
James:
We always talk about the high points. Let’s talk about a couple of those “can I make it” points. As you come up with the idea, you’re going to market. You had a person who joined early on who had support but it wasn’t the end-all, be all. Give me one of those first points where you questioned like, “Man, do I really have the staying power for this?”, or, “Maybe I should pivot to do something else to continue through to my vision.”
Kevin:
Man, listen. I mean I don’t know any other way to say this, but first of all, I think this is the dynamic of what it means to be a founder from an underprivileged background, someone who doesn’t have generational wealth. Maybe you’ve got 10 years or 15 years in your career, you have some savings made, but the thing is you really don’t have the footing to comfortably build a business.
This whole idea about how venture capital works, there’s this common idea among your family and friends that you’re going to be able to raise a half-million to a million bucks to get the company to prove that the company can make money. For some of us who don’t come from those backgrounds, that’s an incredibly hard thing to do. Meanwhile, while you’re trying to figure out how to make the business work, the truth is that it’s a good chance you may suffer personally.
Kevin:
So there were a lot of points that, look, man. I had resorted to substitute teaching. I mean I did whatever I could to cut costs just to try to find a way to breathe life into the company. Yeah, I mean there were times I really was questioning God if, “This is what You want me to do?” The truth is, James, I went looking for jobs at times and I got all the way to interviews with the CEO or VP, and they would say “no.” So I just got to the space where it was very clear to me that this is what I’m supposed to do in life, and I just buckled down and I found a way to push myself through those difficult days, but it was hard.
Kevin:
James, Dave Chappelle told this joke when he got the Mark Twain Award at this comedy house here in DC. He’s like, “There are a lot of talented comedians in the house tonight. Most of you all won’t make it.” That’s what I feel about this because it is incredibly hard. I think people see the fame or the glorious things that people do when they say that they’re founders. They hear that people raise a million bucks, a couple million bucks. There’s this idea that it’s glorious, but man, it is not all of that. Like my first trip to the bank, you and the Transparent Collective paid my way there and put me up in a hotel, and taught me everything I knew, like the foundation things about fundraising. I will forever be grateful for that.
James:
Yeah, man. We appreciate you coming out. I mean in that process, talk a little bit about that. You had already been in the company a little bit. What was the difference when you touched down over there versus being on the east coast, and what’d you take back when you were able to leave? How did that affect the journey to be a part of the process?
Kevin:
Well first of all, man, I just want to say to you and all of the folks at the Transparent Collective how incredibly grateful I am for you and for the work that you all are doing. If there are folks who are listening who have an idea, I would just really invite them to look for the opportunity to apply at the Transparent Collective.
Kevin:
My experience spending a week with you and your team, James, was a milestone in my journey because what you and your team taught me that I was struggling to figure out myself, because at that point, I had not been a part of any accelerators or ecosystems.
By the way, once you’ve seen an accelerator, you’ve seen an accelerator. Everybody has a different way to pitch and everybody has a different way to build your deck, but the foundation you gave was very, I mean you taught me how to write a blurb. I would be sending these page-long messages trying to explain what the company was. You were like, “Nah, bruh. That’s not how you do it.” You taught the etiquette of “don’t crowd people’s inbox.” “Put people BCC immediately if they do you a favor solid and introduce you to people.”
Kevin:
Those things, James, may seem really small, but for investors who are incredibly busy, or other founders who are incredibly busy, if you send a page, like right now if somebody sent a page to me and they want to have a conversation, I don’t read it. I can only read the paragraph. That was what you taught me, just even those fundamentals. They were game-changing to me, and so many founders I come across, they don’t have those fundamentals.
James:
Yeah, yeah. The fundamentals are definitely key.
James:
So when you came out of the program, I know you were then like, “Hey, I’m pursuing this round,” you had found some new people for your team. How’d you start formulating this idea? How’d you decide how much money you wanted to raise? How’d that come about? Because I’m curious, how did you get the five million? What were your steps to pursuing that? I’m throwing a lot of questions at you, but let’s start with how’d you decide on a number, and where were you at with the team at that point when you said you’re going to pursue that $5 million?
Kevin:
Yeah. Well first of all, it’s really important for me to try to put some baseline of understanding about how our company was operating. Up until last summer, everyone who had worked in our company had only worked for equity, unless it was some type of contractor, like we were doing credentialing with insurance companies. Everyone had worked for equity. I’ve been able to build a team that I sold on the vision and sold on the idea of equity. So what that really meant, James, is it was a very transitional team. People who were incredibly committed. When something happened in their life that came along better or their circumstances changed and they could no longer work on the company in their spare time, they left. I’m really proud that we didn’t have any really abrupt departures, like all of our departures, when people left, they were very cordial, but the point I’m trying to make is that we were not able to pay people.
Kevin:
So we were building the concept and building the model with really volunteer help, people who were given equity. Equity’s a whole nother conversation we should talk about too, but eventually, in my mind, James, to be honest with you, people told me I couldn’t raise more than $250,000. By the way, people who are telling people what they can and can’t do, you cannot believe what people tell you. I remember there was this one investor. I won’t call his name, but he’s in Baltimore. He told me that I’d be lucky if I could raise more than a quarter of a million dollars. I just thought to myself like, “Wow. That is a really discouraging thing to hear.” So in my mind, James, I set the goal of raising a million dollars. I basically tried to back my budget in to carry for at least 16 months for a million dollars.
Kevin:
What happened for me is I think my situation is maybe unique, maybe rare. I don’t know the right language to describe it, but I found my way to some investors who really understand mental health. They really understand digital health companies and behavior of companies. One of my lead investors, when I first sat down with him, he asked me how much money I was trying to raise, and he looked at me and told me that that wasn’t enough. He told me to do what I am talking about doing and to execute and build the type of team that I needed, I needed much more money. That changed my whole way of thinking, and I went back to the drawing board and made a whole new budget with whole new numbers on it.
James:
Yeah, that’s funny. We literally just talked about that on another call with some other Black founders, talking about not raising enough for your value, not getting the right value, and also, I think when you talked about targeting the right investors, there’s a lot of people who get in the news, a lot of people who are saying they support Black founders, and maybe they just don’t cut checks in the space you’re in. How did you identify some of these key investors, or how many people do you feel like you pitched before you got to that? What was your investor identification process like?
Kevin:
First of all, I pitched to about 280 people. I was trying to think of this brother’s name. You heard of Jason Crane? I think Jason is in Atlanta, but Jason did an event here in DC with Google, and I heard him say he pitched 200 people before he got a “yes.” In my mind, I said, “Well if he had to pitch 200 people, I know I’m probably going to have to pitch more than that because I’m not a technical founder.” That’s what I was thinking to myself. So I already knew that I was going to have to go 200 minimum.
Kevin:
What happened, after the death of George Floyd and we started to have this racial reckoning, and the racial reckoning is still going on today, going on across all sectors, and as you know, there were investors who boldly publicly said, “I’m only talking to Black founders. I’m clearing my calendar to talk to Black founders.” What I did in that moment, I got very, very disciplined. There was this list floating around of investors who said that they wanted to talk to minority founders. I had a graduate student who was working with me at the time, and the first thing we did is we triaged the list. We categorized them into people who write early stage checks, then we created another category for people who write checks in digital health, and if you wrote an early stage check-in digital health, we pushed you to the top of the list. Then we made another list for people who said that they wanted to talk to minority founders.
Kevin:
I got super disciplined. When I say, it was literally like I would look people up on LinkedIn and I would figure out if I knew somebody who was a first connection to them, I would write and ask for a warm introduction. If I didn’t know somebody who knew them, I would ask people in my network, “Do you know anybody who knows them?”
Like I’ll see somebody who I knew was connected to them. So it became a very disciplined process for me. I mean I literally had two times on my calendar each week that we literally went through names saying, “What about this person? Have we got an email back?” Honestly, I don’t think that had I not exercised that level of discipline that we would’ve been successful, but it required a lot of success.
Kevin:
One of the things I think that I did not really know, investors will talk to you but they have no intentions on writing checks. They’ll only talk to you because they want to see what people are thinking, what’s in the market, and so forth. In the process, I got really skilled. “Are you writing checks right now?”, “How much money is left in your fund? What’s in your reserve?”, “Do you lead? Do you follow on?” Those are super important questions that honestly, you don’t know to ask those questions out the gate. You have to sort of hit your head up against the wall several times before you figure that out.
James:
Yeah. I think that’s super important to keep in mind. I think the 200 investors, man, it’s a learning experience going through that and just coming to the realization of the questions that you do want to ask and who you want to talk to. I feel like, I don’t think it would’ve worked out if there wasn’t a process. I think it’s good that you laid that out.
James:
So once you had that process going and you started having these meetings, what was it like getting to the lead? Did that fall in place, the person who was interested? Was it like, “I’m into lead?” Was it a negotiation of what you had to do? How’d you end up with a lead investor, and then what was the timeframe in terms of actually taking that from, “Hey. Yeah, we’re interested. We’ll lead” to, “I’m closing this round now?”
Kevin:
Yeah. So I’m going to answer, but I actually wanted to share another thought before I go into it. We were fortunate to get accepted into the Morgan Stanley Multicultural Innovation Lab, and there was an Entrepreneur In Residence there. His name was William Crowder. Do you know William?
James:
Yeah, yeah.
Kevin:
So William, man, that brother also changed my whole pitching game because what happens to us sometimes, and I’m sure talking about Black founders here, is people get our deck and they want us to have this elaborate financial model, all of these projects and so forth. I found myself, like when I would talk to investors, James, I would be running like a chicken from every meeting trying to rebuild my deck based on what they were saying, and the truth is most of them had no intentions on writing me a check. William told me, he’s like, “Man, listen. Your deck is good for the stage you’re in. You have a good deck based on where your company is. If anybody is asking you to do more, just tell them you’re not doing it.”
Kevin:
Listen, man. Do you know what it was like the first time somebody asked me to revise my deck for them and I told them I wasn’t doing it? I mean … Oh my goodness, man. She couldn’t believe that I was like, “I’m sorry. I’m not doing it.
If my deck isn’t good enough for you where it is right now, it probably means that we’re not a good fit.”
That was a really good turning point too in how I communicated with the investors because what William was ultimately saying is, “You have something of value, and if people don’t see the value, then they’re not a good partner for you.” The truth is when you’re an early-stage company, your financial model’s your best guess. Everything changes once the business starts moving forward. Those numbers are just your best guess. For me, I was talking to a lot of people, and the big thing that you’re trying to do is you want a term sheet. “All of this talk is cool, but hey, can you give me a term sheet?”
Kevin:
So ultimately, we got a term sheet from this, just a really amazing group of investors at .406 Ventures. When we got that term sheet initially, another fund that was, it’s actually a fund called Seae Ventures that is led by Tuoyo Louis, an African-American male, and his partner is Jason Robart. They’re African-American. I had been building a relationship with Tuoyo for the last year-and-a-half because remember, he’s alongside me raising money for his fund too. So we’re both raising, but he came out of the payer industry, so he really appreciated what we were doing. When Tuoyo learned that we had a term sheet, he came to me and said, “Hey, I’m going to send over a term sheet too,” because we had not signed the first term sheet. I wanted to work with Tuoyo and I wanted to work with Jason, and so I basically asked them if they’d be willing to work together. Our round ended up being led by .406 and Seae Ventures.
James:
Got you. No, that’s great, man.
James:
So you get the money in. You’ve been running off of fumes pretty much the entire time. What’s the first feeling like? Like, “I got it done. Now I can pursue what I’m doing?” What does that feel like and what’s the first thing that you do?
Kevin:
Well, I got to tell you, it’s overwhelming because the first thing you have to do is you have to check your mindset. As you sort of alluded to, we’ve been used to just doing what we can do to get by. Listen, this is so funny: I was using, for example, my family account to give people access to Microsoft Word. It’s just like when I say we were just doing what we needed to do to get by, so the first thing that you have to change your mindset, and really think about, “What does the business need to be successful?” For me, my co-founder is not active in the business anymore. The next big thing for me is like, “Okay, I have to surround myself with people smarter than me, people who know way more about things that I don’t know.” So really, we closed our deal late December of last year but we announced it at the first of the year. Even before then, I got super focused on hiring and trying to get the right kind of talent in because that’s the thing I think that will make the company.
Kevin:
I made pretty good progress on hiring, but not the type of progress I wanted to make. I still have a couple more hires I need to get made, but it’s really about building the team and trying to say, “Oh, I think this is our company,” and the problem we’re trying to solve is a very present problem. It’s not something that’s in the future. We’re trying to solve a problem that is affecting people today.
James:
Yeah, man. Would you say right now with hiring being such a challenge, you started with this idea of “I want to have this health company that can help people from different communities.” Obviously, you want to keep your team diverse. How are you moving right now and trying to solve the problem of continuing with the company culture that you want while also moving at the pace that you want to?
Kevin:
Yeah. I mean, first of all, we actually had our first team retreat last week post-funding and it was just a really exceptional time. We tried to really start the workaround solidifying our culture. I actually left the retreat wondering to myself about, I think our team is incredibly diverse, not only in race and ethnicity but also in age and gender. I left wondering like, “How often does this happen, that people have this diverse team?” The thing that I think that people don’t talk a lot about, but there’s this kind of tension in the startup space that you’re supposed to move the company very, very fast, but when you bring people together with many, many different life experiences, they’re not able to bond as quickly.
Kevin:
There’s this concept called “social bonding” versus “social bridging.” Bonding is, we know, when people are very much alike, it’s much easier for them to bond, but bridging is a little bit more difficult, but if you can bridge, you’ll have better outcomes. I think for us right now, we’re really trying to be very intentional about the type of place that we’re trying to create. I’m trying to be very fair in our salaries. There are not any gaps, there are not disparities between men and women, disparities in race. These things I think you have to be very intentional. If you’re trying to solve a problem to serve the population that we’re trying to serve, you have to do those things. They have to be in the DNA of the company. Actually, I’m enjoying that part. I know you’ve been reading No Rules Rules and I’ve taken so much out of that in how I shape the culture.
James:
So right now, you’re running with the $5 million. I’m assuming there’s a board seat? Someone from the firm’s on your board?
Kevin:
Yeah. That’s a whole nother conversation. I have a three-person board, myself and two investors.
James:
Okay, and how’s that dynamic? Because that’s kind of new as well. When you’ve chosen the people that understand your space, how is that dynamic?
Kevin:
Yeah. So the first thing is, it’s like you decide whether or not you want to marry these folks. Nobody forced me into this marriage, and just like they were … deciding that they wanted to invest in me, I was deciding, “Can I trust them with my vision and my idea?” I actually think that I have amazing partners and I’m very grateful for them, but I think the way that a board works, you don’t want people telling you exactly what to do. You want them to give you expert guidance and feedback along the way. That’s what I’ve been trying to do in the relationship I’ve been trying to create with my board. I think that this is another important point because there was a time, James, that I was just like, “Oh, I got to raise money.” I didn’t think about the implications of what it meant to take money from people, that that might ultimately mean that they’re on your board.
Kevin:
Back to my process, again, I had investors categorized. What that also meant, if they were a lead investor, I was looking for, “What expertise are they going to bring to the company?”
So I have one angel. She’s an amazing angel. Her name is Jillian Manus. Jillian is in the Valley. She’s an investor in our company, and Jillian told me something that I’ll never forget. She says, “Listen, everybody who touches your company must add value, period.” So even if they’re just giving you money, they have to add value. Every relationship that I engage in, whether it’s legal counsel, whether it’s an accountant, whether or not it’s somebody to do Facebook ads, I am really asking the question, “Will they add value to the company?”
James:
That’s what’s up, man.
James:
Now that you’re in your space getting great people on your team, how do you help yourself continue to rise to the occasion? What are you doing to become a CEO? You don’t have to be doing everybody’s job anymore, per se; you can hire up the right people. How do you become the most effective leader? What are you doing to pursue that for yourself?
Kevin:
Yeah, that’s a great question. I actually wrote a piece about this a couple of weeks ago. I think it’s on my page, and it was entitled My Transition from Founder to CEO, because I do think that there’s a big difference, James. A founder, you are sort of like this steward of an idea, and you’re trying to protect the idea, the integrity of the idea. When you get that idea funded, now you have an obligation to not only the idea but to your investors and you’re really trying to build a business. That’s a really different place. For me, I consider myself a lifelong learner. We’ve mentioned one book that both you and I are reading now, No Rules Rules. I revisit Good to Great, I’ve read Radical Focus, Crossing the Chasm. These are books that I think are pivotal for founders today. If you’ve not read Radical Focus and figured out how to put your company’s OKRs together, that’s really how we move companies forward today.
Kevin:
I think committing yourself to learn, surrounding yourself around people who are smarter than you, but the other thing that I have going for me, and it starts all the way back to you, is I just have an incredible ecosystem.
We were fortunate to be a part of a couple of accelerators and programs, and not all of those things came with money, but what they came with was some counsel that I have people like I call you for certain advice. I got an investor, he’s in Jacksonville, Florida, by the name of Jim Stallings. He’s a great guy. Jim didn’t actually invest in our company, but he brought me and my team down to a leadership week. Jim, helps me with all things leadership, all things board advice. I think having this ecosystem that you can tap for advice when you need it is another important part of how you make that transition.
Kevin:
You don’t have to know everything, and I think admitting what you don’t know can be super valuable early on. There’s this article I love that talks about vulnerability as a superpower, and so I’m quick to admit “I don’t know how to do that, and I need to find somebody who knows how.”
James:
Yep. Makes a lot of sense, makes a lot of sense.
James:
Well, I think we powered through a lot of the stuff that we were going to talk about. I know there are probably a few people in the audience, I actually didn’t tap you to make me a moderator, but people can raise their hands, you can tap me, make me a moderator. Harold as well. We can field a couple of questions that might come from some people who’ve been in the room listening. I’m also going to make this recording available later for those who are interested.
James:
I would say just from my standpoint, I’ve been super proud to see the journey. It always excites me to see people get the win when they’ve been working so hard to get it. Let’s bring Jacob up, see what he’s talking about.
Jacob:
Hey, thanks for giving me the microphone. I’m also a co-founder. Kevin, I have a question for you. For the $5 million that you raised, across how many investors was it?
Kevin:
Yeah. So my seed round, we had three investors in the round. It was F-Prime, Seae Ventures, and .406. What I didn’t say, I actually raised close to $6 million. I raised about $5.7 million and some change. The $700,000 I initially raised on a convertible note. The last round was the seed round, but before that, I’d raised $700,000.
Jacob:
Okay. I have another question. For the convertible, because I’m kind of going through this because we’re kind of in, let’s say the alpha product stage, did you explore SAFEs? If so, why or why not?
Kevin:
Yeah. I mean honestly, we set a convertible note up very early on before I even understood what a convertible note was. Then, the first institutional investor I should say that we had to come into the company was Morgan Stanley. We were part of the Morgan Stanley Multicultural Innovation Lab. We had a choice, either that we could do another convertible note with them or we could do a priced round. So we chose to go through a convertible note. The convertible note made the most sense to me based on where we were and how fundraising was going for us.
Jacob:
Thanks. Then my final question, what was the length of time between your idea inception and the first institutional dollar raised?
Kevin:
Oh goodness. It was literally two-and-a-half years. Yeah, right at two-and-a-half years. I mean one could argue that it should’ve been sooner. I didn’t have a technical co-founder. I didn’t have a technical background. I had never started a company, like a startup company myself. I did have another business, but it was a really, really long journey.
Shawn:
Tell us how you kept non-paying staff who wasn’t receiving a paycheck, how you kept them. I mean equity’s one thing, but a hungry belly’s a hungry belly.
Kevin:
Man, I got to tell you, next to being the father of Davis, Ella, and Anna … convincing people to work in the company when they were not compensated, that is my greatest accomplishment in life. I am still stunned, but I think that, like our vision and the mission of our company is still so compelling, is still so attractive that people wanted to be a part of it. It’s funny; we made an offer yesterday to a young man to be a mobile developer for us. The young man said to the young lady who’s making the offer, “I don’t care what the money is. I just want the job.” When I talked to him, I said, “Listen, man, you got to care about what the money is and you got to care about the equity offering.”
Kevin:
I think that’s how, man. People were just incredibly attracted to our mission and they wanted to be a part of it, and people believed. I think that that gave people staying people. Until, as you said, when their life circumstances changed and it was no longer convenient for them, people did sort of say, “Okay, hey. I can’t do this anymore,” but the thing is, we always saw and we were always convinced, “We’re going to close in three months. Then after we didn’t hit that goal, it was like-
Shawn:
I know what that’s like.
Kevin:
“We’re going to close in two months.”
Shawn:
It’s so true.
Dante:
Thanks for having me on the platform. Kevin, I love your story. Big inspiration.
Dante:
I have a question about building your team. When you were building your team, did you ever have to fire anyone at the early stages or anyone that you were given the opportunity because they weren’t on the same page with you or bringing the same energy towards your dream? Did you have to let anyone go in the early stages, and how was that experience?
Kevin:
Yeah. You know, man, listen. I really believe in loyalty. I think that this is probably a struggle that a lot of early-stage founders have because you need to move your company fast, right? I only have had one relationship that ended in a way that I was not super proud of, but in that, I was trying to move that person to another place in the company where I thought the person could be more valuable and be better for the person and for the company, but the person was stubborn and didn’t want to make the transition. Here, time is everything. So that was the only relationship that I had to sever, and it really pained me deeply because I wanted to preserve it because again, most of the people who have been attracted to our company, they came because of the mission and they were compelled. They wanted to be a part of it, and they had talent that we needed when they showed up, but the company is not the same company it was even four months ago. Your needs change.
Kevin:
It’s interesting; I don’t think the team would mind me saying this, I’m not exposing a lot, but we, for example, had some people doing customer service who don’t have experience with drip campaigns and moving people through the process. So we’re like, “Hey, y’all can’t keep doing this. We got to find somebody who knows what to do here.” It’s one thing to be nice to people, but if you don’t know how to move them through the process, it doesn’t work for the company. I think being honest about that, and if people really want to see the business move forward, they’re committed to the business, if you can’t find a place for them, it may be a painful period initially, but in the end, they’ll understand.
Dante:
Thank you, I appreciate that. Great answer.
James:
Yeah. That’s always part of the process, I feel like, as a first-time founder. I mean, I don’t know too many people who founded their first company and didn’t have a co-founder issue or didn’t have to get rid of an early employee. Again, I also know very few people who haven’t had at least one person who was like, “No, that didn’t go the way I wanted to.” I’ve had that experience myself as well, and that not going well, one thing you got to keep in mind is while there might be one person more at fault than another, both people are at fault in that case usually. One person didn’t give enough transparency to the other about where they were mentally. Another person was trying to put too much pressure on someone to do something they’re not capable of doing. Whatever it might be, that fault usually falls on both parties.
Kevin:
Yeah, and James, I mean to your point, some of these skills that you need to make your company move so fast, they’re so technical. So hiring your friend to execute on them is a bad idea from the beginning, right, but when you’re without money and you’re trying to get people to help you out, I mean you have to take the friends, but then when you get to the place where it’s now time to move the company, that’s where that tension kicks in.
James:
Cool. Any final thoughts that you want to put out there just around the journey that you feel like people should hear?
Kevin:
Yeah. Man, I think my closing thought would be, James, I know that there are people out there with solutions to problems that need to be solved, and only they have the answer. In that journey of trying to find investors, you will get discouraged. People will tell you you can’t do it, you can’t raise money, and you’re going to have all of these things working against you, but if you believe that you have an answer to a problem and only you have that answer, that should be motivation to keep trying and not let anyone discourage you. You won’t get this constant affirmation along the way, but what you look for is light posts, like an acceptance into the Transparent Collective or some other founder saying, “I think that’s a good idea.” If you can get those simple affirmations along the way, you know you’re heading in the right direction.
