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Aaron Hirschhorn

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29
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2016-05-13
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2016-05-13
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  1. “The most interesting thing about our site is the fact that in order for the trust to really happen, most people want to meet in advance. And so you've got this unusual dynamic where in the on-demand world people are used to pressing buttons and getting what they want. And you can use our service that way. We have instant book features, but you're talking about dogs. And dogs, you want to know that this person is going to do a good job caring for your dog. You're going to trust them. You're going to see their house. You also have dynamics where is your dog going to get along with their dogs? Is your dog going to get along with other dogs that they're watching at the time, doing our best, but have certainly not cracked this code of how do we support and figure out this meat and greet and support people meeting in the real world and discussing these things back and forth while still staying on the platform. And so people do all sorts of crazy things where they're introducing dogs to each other. And it's just a bizarre way to think about how an internet or tech company can have.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Whether that happens as an independent company that generates cash and stays private goes public, is acquired, is sort of not really relevant, we have to run our business and make it grow and build, satisfy our customers and eventually get to profitability or something. That's how businesses work. And that's how I think about the end goal.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “In startup world, people think of exits as success. And I think that's true in the sense that the founder and the founding team and the investors make their money back. But that's not the business. So I separate out making money and the potential to make money for my employees and myself and my investors from what the business looks like. So IPO is simply one other fundraising event. And it's a fundraising event that's important and has a lot of shows that you're a mature business, but it's just a fundraising event. So for me, success is being the leading pet care company in the world. Now we've got about 25,000, close to 30,000 sitters on our platform who are earning income millions of dogs who are not in cages. Building that, doing more of that, doing more services, adding products, adding layers of technology around connected devices, making this a thriving ecosystem and a leading pet care company. That's my goal.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “I mean, I'm an avid New York Times Wall Street Journal kind of guy. I just like, I think the real high-level news is really important. Bill Gurley has a great blog, but publishes it only like once every three months, so that's not an everyday thing. Jason's got a great ticker that he sends out daily from inside, which I think has a lot of snippets and soundbites of interesting news. Those are some things that I read regularly.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “It was awful. It was really bad. I mean, the site was cobbled together. Finally, when we got some funding, I was able to hire a couple local developers. But even then, we couldn't pay a lot. We didn't give a lot. So you're not always getting the very best talent. It's hard. I mean, I could show you some screenshots and mocks of these early designs. I mean, it looks like a dog's breakfast. It's awful. Absolutely awful.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Ends up focusing on. And so you ultimately make choices around rebuilding or keeping what you've got, I would have just done something a lot smarter and out of the gate. It would be allowing us to move faster even today, four years later.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “One thing I would change is I would be much smarter about how to build the initial infrastructure of the site. We're still working out, working through a lot of technical debt. And you hear that a lot. You hear a lot of companies say you always have to throw away the first version because I had such a concept that most people chuckled at because I was a first-time entrepreneur, I simply couldn't find anybody good. And I remember going on to, it was Odesk at the time. It was one of these freelance work platforms. It's now Upwork. I had one guy in Guatemala coding my site, another guy in Armenia, designer in India, cobbled the thing together, two different languages. It was a disaster. And, you know, I would have just gotten better at finding someone good and making smart architecture decisions so we wouldn't still be tiptoeing around elements of the code. But it's not an uncommon thing to hear. We're even very, very smart guys who know a lot about engineering, the V1 of the product ends up being quite different from what the business.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “But I think every business where trust is important needs to develop something of their own that's proprietary. And then, of course, you've got to manage it extremely actively once you're on the platform. So we get feedback from customers very quickly. We do home inspections. We do a lot of work to get stuff, to get feedback as early on in the process as possible, but on an ongoing basis as well.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Yeah, and it depends on, again, the nature of the business. And I hate to keep going back to the Chinese food thing, but I don't really care to trust the guy delivering my food that much. I'm an investor in a business called Hop Skip Drive, which is effectively an Uber for kids. And you can put your kids over seven years old and in the back of a car with a car seat or booster if they need it and drive them to their next activity, you got to trust that guy. So they're doing a tremendous amount of work. I think it's like 27 different trust elements, including background checks and interviews and so many different aspects to it. So it depends. And I think there's no single answer. Background checks are an interesting one. They've become table stakes for the sharing economy between you and me and I guess all of our listeners. I think they're far from sufficient to really tell you that background checks are highly imperfect. They only look at a certain time frame. They only look at certain areas. So you can catch things.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “I think that's probably one of the least understood and least appreciated levers of growth that you have for marketing. And a lot of people talk about optimizing Facebook ads, optimizing ads, doing TV. If you don't have a good conversion rate, if you have a leaky funnel, if your product's not good, none of that matters. So most of the leverage that you get, I believe in growing these marketplace businesses, is around getting more density, getting more liquidity, making the product tighter and tighter so that your marketing spend becomes more efficient. And ultimately, that's how you grow.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “You know, it's a new concept still, and I think these things take time, and especially ours where it's a highly trust-based business. I mean, this is not delivering dim sum. If somebody messes up my Chinese food order, it's not the end of the day. If somebody messes up caring for my dog, that's a problem. There is an element of this is going to take a little while, all the more reason why the unit economics have to be strong and sustainable. Excuse the pun, you know, we're facing tailwinds, right? So people are more and more comfortable doing things this way, buying services online on mobile, trusting strangers with things because they're confident in the company and the brand's ability to vet and provide quality. So all those things help. There's no secret to it. This is just execution and it's about analytics. It's about making your customer acquisition cost less than your lifetime value of your customers, understanding how to improve the conversion rate.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “He is an extraordinarily smart. It certainly is funny for me to think about him being on public company boards, being on the board of Uber valued at $60 billion, and then coming into our board meeting. And there's dogs running around. And board slides have pictures of puppies. And so he tolerates it. But at the end of the day, it's all business. Bill's incredibly smart and just ultimately wants to win and will do anything that it takes to win. And he's been great. I've learned a ton. We've made a lot of smarter decisions to having him on board. And he's a great advocate for the business.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Bit easier for us to get than demand, which we talked about, will charge the supply more money. Other businesses might be different where demand is harder to get or easier to get, you might charge the demand side more. So it really depends how you figure that out, how you split costs between the two sides is unique to every business.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Yeah, I mean, that depends on the business and the market. Obviously, I can speak with most detail about our industry. If we look at pet services, we're still scratching the surface in terms of market penetration. So we're the leader in the space, but have a market share of 50 basis points, less than 1%. So in that sense, yes, you need to be chasing growth. You have to do it sustainably. And I think that's the discipline that we've had. Bill Gurley is on our board from benchmark, and he's been saying for pretty much as long as I've known him that the bubble is going to burst, and he turned out to be right about three years later. We've looked at and had strong unit economics from early on. You've got to make it work. You've got to build a sustainable business. And that's just a matter of finding the right balance. Do you charge the demand side? Do you charge the supply side? Which side is more scarce? So, for example, because supply is a little bit...”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “And so some of the delivery businesses, deliveries existed. Are you making it better? Yes, but are you charging a lot for it? Yes. And I think there's not going to be as much room for so many players. I think when you're talking about something that actually makes your life better and saves money, those are the businesses that have massive potential to grow. That being said, the unit of economics have to be right. And what you saw last year, of course, was incredible funding coming into all these different companies. And growth was the name of the game. People didn't look at unit economics. They only looked at top line and it forces way too many competitors to come in. And I think like food delivery space is a great example. Massive fucking market, don't get me wrong, like massive market opportunity. But at the end of the day, there's not a lot of differentiation. All these guys are going to be”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Yeah, that's a fair question. I mean, I think we're starting to see a blend between people calling it on demand and sharing economy and marketplaces. The ones that I am most excited about, the ones that I think have the highest probability of success are those that offer a better product or a better experience at a lower price. And probably the best example of that is Uberx, not the core Uber product, but UberX, where it is a better experience than a taxi by far and more affordable. And then, of course, selfishly, I'll put Dog Vacay in that category where we offer a far better experience than the Kennel at about 40% less on average of cost. The businesses that may be very successful, but I don't think will be as huge are those that charge a premium for convenience. That's not new. Like rich people have always been able to get things easier and quicker by paying for it.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “I don't know that. I mean, I think because I got such great guidance from these guys, especially Peter and Mike and Bill, who all have very similar philosophies to how their company should best fundraise by creating these competitive processes. I don't know that I would do anything different. Look, at the end of the day, it's all about your business. And if your business is doing well and your unit economics are good and your growth is good, you'll figure out a way to get funding. Even in a shitty market, and if it's not, you're going to have trouble. You can optimize and make yourself, give yourself a chance for a better shot if the business isn't working. It doesn't matter anyway.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Domain expertise is important, so we're building a marketplace business, and so anybody who had experience, and marketplaces are far more common now than they were four years ago, so it's still relatively early. Anybody that had experience with that was very important. I did like having credibility, so getting kind of a tier one VC, if possible, is always good. They're both smarter, have deeper networks, and again, give credibility for what seems like a silly business to people looking externally. And then, of course, there's the numbers. I mean, people are writing different size checks at different valuations, and those are very real considerations. So I don't think there's a single thing that you look at. It's a combination of all those factors. But that's if you're lucky to have the choice. And we were fortunate to have the choice back then. I don't know that that's always going to be the case. If there is, you know, if there's food on the plate, then you should eat it. So if someone's giving you money, I wouldn't turn it down.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “It's more than five. I'd say it's more than 15. For us, it was like 30. The VCs that you meet with first, those are the ones that you don't actually want in your deal. So what we did is we did first practice rounds with our own internal investors. Then we had a group of three or four for whatever series of reasons were not on the top of our list, but we put them first in the process because it gives you feedback, it gives you real questions that you have to answer. Then you're iterating and updating your investor deck. And then the guys you really want are like week three. And you stack all the guys you really want in week three. And that's sort of how we went about it. For the series A, I probably did 30 pitches.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “I don't know. They all talk to each other. It's remarkable how much on Sandhill Road these guys know what's going on. They see that you're going from one meeting to another. So you don't even really need to do that. And they see, at some point you say, look, they might say, hey, we're a very common question that I would get is, hey, where are you in the process? And then I might say, oh, we're very early. Or look, we're fairly far along. We've got a lot of interest. Or like, yeah, we've got a couple term sheets. And I think it really just depends on the situation, what and how you want to share with that information. But by and large, it definitely helps the investors write a check to know that you've got other people courting you.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Just sitting in a meeting knowing that it didn't matter made it even more attractive. It's like the girl that doesn't want you and you want them more because of it. It really is that that dynamic is real. Now, of course, the business has to be solid. It can't be smoke and mirrors, but confidence goes up tremendously. And so we ran a very tight process for our series A round, for our series B round, and growth was very strong. It was the height of a market boom, so we were able to pull off some fairly tight raises.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “He's a science as well, yeah. And so he explains something and helped me run a process that is very tight. And I also give founders this guidance. You really want to control the dialogue. You want to control the narrative. A lot of founders fall into the trap of these casual conversations with VCs, oversharing information at various times, and what that does is it takes power away from you and gives them more opportunities to decide to say no to convince themselves out of a deal. And so I give this advice to founders a lot. When you're ready, you run a real process. You have your target list of VCs, you have a proper deck, you have a proper model, you build a schedule where you give everyone essentially the same starting point, and then you create a competitive process. And there is nothing like competition to get people to write a check that they might otherwise be hesitant to write. And then once you get that very first term sheet, oh man, does that feel good? I remember the first term sheet I got. Suddenly everything flipped.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “Yeah, I mean, so we went out in 2012, raised a seed round. I'd say this was the very, very beginning of what became the kind of venture capital funding boom or bubble, if you want to call it that. So the process for the series A round, we ran a fairly tight process. I had great guidance from a gentleman named Peter Pham, who's an advisor and investor in the company. He's a son.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “I mean, it did a little bit. I had spent a little bit of time about a year and a half, two years on the VC side myself, so I saw that most deals didn't get funded and I went in with a fairly sober view of knowing that your hit rate's going to be relatively low. I do think the thing that helped was people saw my passion and they saw that I actually lived the business. It came from a real experience. You know, every time you get just a little win, even if it's early at $25,000 check, that's very buoying and it was very exciting. And so you just keep plowing forward. And I think the most important thing, and I always tell this to early founders, is like you just have to keep showing momentum, even if you keep getting rejected, if the business shows some momentum. If you release a new product, if you've got a new customer, whatever the thing is, there's nothing better than that for yourself to feel better, for investors to ultimately feel better.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “For the subset of people who understood it. I still had a lot of people who chuckled. I had a lot of people who said, hey, come on, this is dog, same story. But benchmark and Bill Gurley were believers in the market opportunity and all the great things you can do once you build the trust of pet owners in general. And then once Benchmark came in, it became even more easy, if you will, to show that we were a real business.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “I appreciate it. I don't think we're quite a behemoth yet, but I believe we're on the right path. To your point, as I was pitching this concept, I got a lot of laughs. People are like, you know, come on, I'm a serious VC. Why are you bringing me a dog-sitting business? You know, I think one thing that did help early on is that I had actually watched over 100 dogs in my home over the course of 2011 being the dog sitter, being the very first dog vacay sitter. And so I lived it. And so the two or three people that got it, you know, Mike Jones over at Science, Howard Morgan at first round, getting a little bit of that early credibility made a huge difference because it meant that we weren't, we got credible people behind us. That's one win. But ultimately it was about the growth and going from zero to several hundred thousand in gross bookings in a few months, then it became a fairly easy series day story.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “I mean, it's interesting. We launched in March of 2012, and I think the first month we must have had just three or four bookings, but people started talking about it. And the next thing we knew three months in, we were doing a few hundred thousand dollars a month. People hate the kennel. They hate paying $50, $60 a night to leave their dog in a cage. And as people discovered this, word of mouth took off. And so I think it was early traction, early revenue, and just seeing that people were coming in from word of mouth was the biggest indication that we had something that was working. Now we made lots of mistakes. We continue to make lots of mistakes, but the core of the business hasn't changed. People watch dogs in their home loving attention instead of being stuck in a cage at the kennel.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “To this day, so from the beginning and to this day, the demand side is harder, and I'll tell you why. If you think about the business on the supply side, our value proposition is sign up for free, make money watching puppies, and that's a very easy sell for most cases. So we have more applications than we know what to do with. We approve only about 15% of our dog sitter applications. On the demand side, where a dog is like your child, we're basically saying, hey, drop off your child at a stranger's house and give us your credit card. That's hard, pulls in trust. It pulls in a lot of challenges around a new business model in an old world, so definitely more demand constrained, but as we've shown, we've had product market fit since very early days and we've booked dog nights in the millions so people are absolutely using the service and love it.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “The aha moment for our business was my wife and I traveled to the east coast to visit our families and left our two dogs in a kennel in Los Angeles where we currently live. And it was a 10-day trip. We came back to a fourteen hundred dollars kennel bill and my dog Rocky was traumatized hiding under my desk for three days after. And we said, oh my God, this is an awful experience for the dogs, an awful experience for the humans and for the human's wallet. There must be a better way. And that was when we began to take a look, realized that the opportunity is massive. There's eighty three million dogs in the US, which is more than there are kids, by the way. And the pet services market is $15 billion in the US and completely fragmented where nobody has even a couple points of market share. So it's a wide open opportunity.”

    2016-05-13 · The Twenty Minute VC · 20VC: Creating A Competitive Process Between VCs & Having Bill Gurley As A Board Member with Aaron Hirschhorn, Founder & CEO @ DogVacay · IDENTIFIED FROM THE TRANSCRIPT · source