In this episode, Dan sits down with Founder & CEO of Catch.co Kristen Anderson.
Kristen is the Founder & CEO of Catch - a benefits platform for people who don't have employer-provided benefits, like gig workers, entrepreneurs, etc.
As she tells the story behind the startup, Kristen shares how she identified the opportunity behind the common misconception that technology alone made the 20th century a success- it was really benefits!
Kristen talks about starting at Catch as head of product, then actually moving into the Founder/CEO role later! Then, touches on what benefits mean in the age of multiple income streams, what it was like at YC, and how she ultimately raised $10M.
She offers valuable business and fundraising advice throughout the interview.
Product Market Misfits is a podcast that helps entrepreneurs learn more about starting companies and getting funded by sharing conversations with venture-backed founders. For more, visit us at www.ProductMarketMisfits.com
[00:00:00] Welcome to product market misfits, a show focused on helping founders go from idea to product market fit by interviewing amazing venture backed founders so that you can learn from them and better navigate the wild ride of entrepreneurship. I'm your host Dan Hightower. And in this episode, we have Kristen Anderson CEO of catch.
[00:00:27] A benefits platform for freelancers, solopreneurs and gig workers catch helps them handle their taxes and benefits, and you can find them@catch.co catches venture backed with some amazing investors, including Khosla ventures and kindred ventures and the urban innovation fund. Just to name a few. In this episode, we cover how Kristen got into startups, the importance of speaking to customers early and often and way more.
[00:00:49] So I'm very excited to welcome Chris into product market misfits today. first off it's been. Awesome. getting to know you on Twitter. I
[00:00:59]So I'm super [00:01:00] excited to talk to you today
[00:01:01]I'd love to hear your story, like how you got to
[00:01:04]where you are today.
[00:01:05]Yeah.
[00:01:05]So actually being
[00:01:07]born and raised in Reno, Nevada is probably a part of that. I'm first gen college. My parents, my dad was in a union.
[00:01:14] My mom didn't work for most of my childhood and then was part-time office manager. And my parents put through my sister and I through college. They also retired in their fifties and they did that because of benefits. And so there's an overarching story in terms of how I've thought about the arc of my career.
[00:01:31] Which is to say that like financial products and services designed for families can change the trajectory of people's lives. And that's always been really interesting to me. My parents didn't make a ton of money. Like we did fine, but the middle class yeah. Existed because we had benefits.
[00:01:48]We had retirement taking care of health insurance, taken care of those are the sorts of things that I've just seen, eroded over the last 15 or 20 years as people have gone into these on-demand roles, which brings a lot of opportunity. [00:02:00] But I think the financial infrastructure hasn't really kept pace.
[00:02:03] And so we've pulled the rug out from under people and that's. That's why the middle-class is disappearing. So that story, I think is actually a big part of it. Like just being from a town that like I live on the East coast and a lot of people I meet here, Oh, I've never met anyone from Nevada.
[00:02:18] I went to school in Southern California, graduated during the last economic crisis. And instead of going into the workforce, decided that I wanted to go to grad school. And I was really concerned about starting my career trajectory off wrong. I had friends who were like, I'll just work at Starbucks and then I'll find another job later.
[00:02:33] I chose to take on 50 K of student debt and go get a master's degree, which was a big risk. We didn't know what the economy was going to look like. On the other side, I moved to Boston. I went to London for grad school, finished my master's in China, and then moved to Boston. From there with a part-time internship.
[00:02:49] So if you want to talk about like the fun stories, it was 2011. Like the economy was better, but not great. And the only job offer I had after I had my master's was an internship that paid [00:03:00] $2,000 a month. And I took it and I was like, I'll figure it out. I just didn't, I didn't want to go back to Reno. I didn't want to get stuck in a place where I didn't think I could grow my career.
[00:03:10] And so I just decided that I was going to find a job here in Boston. and so I've been here for, nine years now. Found a job eventually. No, I actually turned that internship into a full-time job, which was great. So I've worked in consulting. I've been a professor. I was an MBA professor for a little while and in China, I worked for a bunch of really interesting big companies in my consulting roles.
[00:03:30] And I. Left consulting after a couple of years, because I wanted to make something I wanted to actually build it instead of just like telling other people what to build. And I went to a nonprofit, I was building products for a firm that was founded by a Harvard business school professor that did Banking and financial products for the underserved. So I worked with Walmart, I worked with banks and credit unions to figure out how to engage people in financial services, to help them save money and improve their sort of financial wellness. [00:04:00] And nonprofit was a little slow for me. Great. It was great from truly amazing experience, but I didn't.
[00:04:05] Feel like I could run fast enough at the things that I wanted to. So went to a venture backed company after that it was the first hire and had a product at a company that did student debt repayment as an employer led benefit. And then after about a year and a half doing that, I left to go to catch. And I think one of the interesting things about my story that I've talked about before, but I think a lot of people just.
[00:04:24] Just assume that it's not this way, but I was hired as head of product at catch. So my co-founder brought me in not as a co-founder, but as head of product. And I think that founding story is actually really important. And one that I wish more people would lean into. I think a lot of people that get really excited about an idea and they're like, we're going to be co-founders and then they like commit 10 years of their lives.
[00:04:44] Like someone they barely know with an idea that isn't flushed out. What was great about my process with my co-founder is that each step was double opt-in. And each step was like, yes, we want to keep doing this. so I went from director of product to COO and co-founder. And then after about a year and a [00:05:00] half as COO, my co founder was like, you know what?
[00:05:02] I want to be closer to our engineering team, to our design team, to our product itself. And you are the one who tells our story. So I took over CEO about a year ago. Okay. There's a lot in there. Hold on. Okay. So the first thing that I loved was you're like, yeah, my parents have this background that makes me really excited about, or you said interested in benefits, which I think is like underplaying a little bit.
[00:05:27]Like you have this like family experience that really keyed you in on how important benefits are and just like giving that lip service. But it's just It's actually incredibly important in me with military background. Like the benefits you get coming out of the military are key to survival for a lot of people.
[00:05:48] Yeah. And I think there's a false narrative in this country that the success we saw in the 20th century, that the growth of the middle class was because of technology and efficiency. I think it was because of benefits. [00:06:00] Like we helped people plan for the future. We helped them protect against emergency.
[00:06:04]that's what, that's what lets families grow and survive. And that's what helps them like take vacations and provide education and like getting people educated and, into these sorts of experiences like that doesn't happen when you're living paycheck to paycheck. And everybody knows that everybody sorta knows that, but what we haven't really acknowledged is that it's the.
[00:06:25] The de-risking of benefits, like benefits used to sit more with the government. Then they put that full weight onto companies and said, it's your job to provide this to your employees? Things like pensions, right? Which like non-existent for our generation. And then that risk has been put on to individuals.
[00:06:43] And so it's your stability is completely on you. And I think that, I could talk politics about this all day, but I think the piece that sometimes gets missed is that The automation around a W2 paycheck, which is a lot of what we try and build a catch the automation around things automatically going towards [00:07:00] your future retirement things automatically going towards your health insurance, like taking care of it without you having to think about it is not about socialism.
[00:07:08] It is about like providing tools and to recognize that like humans don't want to sit down and figure out every piece of income they've received and like how it all fits together. And so the traditional HR benefits model. Provided a lot of stability for a lot of families. And as we've changed the way we work, like we just haven't brought any of those same technologies and applied those same principles, like auto enrollment and 401k.
[00:07:33] If you talk about people who are earning less than $30,000 a year, it's not a ton of money. If you auto enroll them in a 401k, they will participate at a rate of 50%. So people are like, Oh, they're too poor to save. They're too poor to save for retirement. No, they're not. It's just that they need the right tools.
[00:07:50]You can get 50% of them saving for retirement, if you just like default optimum. So we have to use those principles, get people involved in those financial products. And I think that was just [00:08:00] like my dad never talked about getting health insurance. Like we just had it through the union.
[00:08:03]Like we just had health insurance. And so I think we want to like, Make that available for people who also are now working in ways that, look for freedom and flexibility. So gig work, on-demand work consulting. What's the word, digital nomadism, whatever it is you want to do, you should have access to those same tools.
[00:08:20] Yeah, absolutely. I don't really know. I don't, this isn't really a question, but I'm super, like when I see, so my dad was a doctor and he used to come home like in the, this was like in the nineties when I was like a kid, it'd be like, The question is changing. I used to, like when I was young as a doctor, I used to be asked like, how much is this going to cost?
[00:08:42] And now the question is am I covered? And the prior was. Correlated with like tears and like a lot of really hard conversations around like the true cost of fully exposed, like private pay, like the consumer is paying for healthcare. [00:09:00] But now we have the safety net that we talk about in these terms that everyone knows.
[00:09:04] And yeah, you have benefits, but underneath all of that is like this, fear, like there is a true fear to not having these things that keeps you from being able to, Innovate or have a role, have a job that you enjoy, like that's exactly right. Have four kids instead of one.
[00:09:24] Yeah. I knew a guy who went and got his MBA from MIT and I think had a grand total of 150 K in student debt. And he took a job at Amazon. Because he needed to be paid well enough to pay down that debt and to have those benefits and the store. you hear the story again and again, Oh, I have to work at this company because they have good health insurance.
[00:09:44] Like what sort of costs are we losing from entrepreneurs who are stuck at big companies because they need health insurance or because they have student debt or yeah. I don't know how you feel about it. actually I would love to hear how you think about the relationship between [00:10:00] employers and health insurance.
[00:10:01] Like generally. it's a ridiculous construct, right? Like the financial products and services industry being distributed through employers. I include health insurance in a financial product, by the way, because it is a financial product, It's a pooling of money to cover risk, right? that's a financial product and.
[00:10:19] We historically provided it through employers. Do you know the history of this, of why it comes from employers? Because there was like a wage cap in w and worldwide. It was a way of hacking the wage gap so that you can maintain early, retain. I think it was attract and retain. I was like, yeah, I get good people.
[00:10:38] When most people were off fighting the war and you shouldn't pay them any more money is a hugely pull. And it was just happenstance. So it was like, okay, we're going to do it this way for now. And that was what, 75 years ago, almost 80 years ago at this point. And it's okay, so now we just do all of our health insurance through employers.
[00:10:54] One of the things that's interesting about employer sponsored health insurance too, is that it is a plurality of our system, but it's not even a [00:11:00] majority. between the VA between Medicare, between Medicaid. Like we have so many different systems in one, like employer sponsored health insurance is the largest.
[00:11:09] I think it's about 48% right now. But it's by no means like the entire system. And yeah. First of all, it's crazy to tie it to your employer. It doesn't make sense that the legacy system, it was based on efficient distribution and tax loopholes from seventy-five years ago. Second of all, you've got 52% of the population that don't even fall into that.
[00:11:26] And so our whole system is not one system. So anytime I hear this conversation around, we need to keep the system, we have, like the system we have is not a system. It's eight systems, There's no rhyme or reason behind it. Like it's horrible. Yeah.
[00:11:39]And it's not real choice. It's we need choice. I'm like, what kind of choice is that? I know we have two plans too. We have a PPO and an HMO and we're like here, pick which one you want. But it's not real choice. Especially proponents of choice. yeah. It's quote unquote choice,
[00:11:54]but really it's I want you to take this high deductible plan
[00:11:58]as an employer, and I'm going to [00:12:00] shove you in this direction
[00:12:01]by how I engineer.
[00:12:03]The pricing for
[00:12:04]And if you think about the, like the construct of health insurance as like a general,
[00:12:09]what is it supposed to be again, it's fine. It's money pooled together to protect against risk. I know there's a lot of complexity, but like at its simplest state, that's what it is.
[00:12:18] And so what we know from the law of large numbers, Is that the bigger the group, the lower the price. And so the fact that we have eight different systems is incredibly costly, right? And like it's so expensive to keep making the group smaller and smaller all the way down to the individual marketplace, which is what we serve.
[00:12:36]those plans are so expensive because it's a group of size one. And so it's like even small businesses like ours, we have 20 people at catch. Like we're not getting great. Deals on health insurance. Like we're getting better deals than when we had five people, but not by that much, what we need to do is make the groups bigger, not smaller.
[00:12:52] It's better for the insurance companies too. I don't know. It seems like there's a lot to fix that. I know you talked to Shannon, Shannon's got some [00:13:00] good stuff going
[00:13:00]Anyway, let's take a step back. And can you tell me what a catch does? Yeah. Catch provides benefits for people who don't get benefits from an employer. So taxes, retirement, health insurance for the any 87 million people who are not getting benefits from their place of work. And that number is growing. so you're riding some incredible momentum on a couple of different fronts.
[00:13:27] One of them is the decoupling of. Insurance from employers like health insurance, specifically public exchange, or what is it? Private exchange, public exchange. How do you the marketplace is what the cool kids are calling it now of that. it's actually called the federally facilitated marketplace.
[00:13:45] We'll go with the market. There's that? And then there's this like gig economy that we can get into, but I love to hear.
[00:13:54]About what,
[00:13:54]what's your up to within the context of these like tailwinds that you're writing?
[00:13:58]Yeah,
[00:13:59]we, [00:14:00] we were founded in 2016. We've been building really an earnest since probably mid to late 2017.
[00:14:08] And so we've seen, this trend is not new, right? Like the gig economy is at least a decade old. Like a lot of this stuff has been around for a long time. Like independent workers are being enabled by technology in ways that they were not able to work in the early two thousands. And so that was a lot of the initial work that we had done was for that world, the.
[00:14:27] The unfortunate side of some of the tailwinds that we're seeing is COVID and people just like losing their jobs in the tens of millions, right? Like not having access to stable employment and looking to independent work as a way to shore up their income. And. Their stability. So it's great that exists.
[00:14:45] I think that's one of the things about the gig economy that I find most appealing is that this idea that you could just make some money, even if it's not like thousands and millions of dollars, like the idea that you can just make some money. if you need to, on-demand like, that's really powerful.
[00:14:58] And I think that's great. I [00:15:00] think the challenge, and again, the reason why we exist is that as people Pile into that, whether it's by choice and wanting freedom and flexibility, or whether it's by force, because they can't find stable employment elsewhere. there's this immediate effect of Oh, they pay out every day, Oh, I just worked for a couple hours and then I got 90 bucks.
[00:15:16] That's so great. And people like, it's addictive. It's that like that rush of Oh, I get paid immediately. What we see is that we have this interesting sweet spot of after Anywhere between six and 18 months of working independently that people have this like this, Oh shit moment of IO taxes.
[00:15:33] Like I need to be thinking about my future. Like I have all these other things. And so the tailwinds are, we're like a secondary consequence of a lot of those tailwinds and that they've been happening for a long time. And now enough people are like, Wait, I have to pay taxes on this money or like they do the mental math without any rhyme or reason.
[00:15:51] And they're like, yeah, I set aside like $2,000 and it's yeah, you owe like 10. So they just have no idea how much money they owe or what to set aside. And so there's like [00:16:00] just a huge gap in being able to provide those services. So it's great. It's great timing in one way, but it, sometimes opportunistic businesses can feel a little weird when you're like, Oh, it's so great.
[00:16:11] All these people don't have health insurance and they can get it through us. Now. It's Yeah, but I wish that we like better for them. So I think that's one thing about like socially, like mission-oriented businesses is there's always this tension between like we're solving a huge problem that makes us feel good about the world.
[00:16:27] And it's then when that problem either gets bigger or like the fact that problem still exists is like necessary for our business. I think that's a tension that. You have to find ways to like address in your day-to-day execution and companies like Uber, like just chose not to write, like they made this early jump and said, Hey, we're helping people get income.
[00:16:45] And therefore, like nothing else matters. And all this sort of like unintended consequences of that are now starting to come to bear. And it's like a decade too late. Okay. So you have this background at the nonprofit, and you mentioned earlier that it was like
[00:16:59]very [00:17:00] oriented around a similar thesis.
[00:17:02]yeah, when I was in grad school, I worked with a group that was running a social enterprise competition.
[00:17:08]And so we like wrote case studies where we worked with bill Clinton. Like we worded at a million dollars. And so I like ran the event in London when I was in school. Which was awesome, but it was the whole idea was like, how do you build socially good businesses? And it was for a business school students all over the world.
[00:17:22] And that was like my first introduction to this idea that like business doesn't just have to be about shareholder. I was in business school was literally in business school at the time, but it was like, you don't have to just think about what the financial returns are. And there are ways to do good business that also does good in the world.
[00:17:37] And I think that was just. It just resonated. I think it resonates with a lot of millennials. I think it resonates with a lot of gen Z, this idea of I want to add value in ways that's more than just financial. And so I think that was just like, Always something that was interesting to me, but I didn't want to go live in Africa and just like there are people who do that and it's amazing.
[00:17:54] It's just I wasn't quite ready to commit to helping entrepreneurs in Africa and I still felt like I wanted to [00:18:00] be fairly stable, not that big of a risk taker, which is ironic now that I'm a founder. but when I was at the nonprofit, I think. I saw two things. One was an opportunity.
[00:18:09] One was a challenge that I saw with the model that they were using. The opportunity was that like you can use behavioral interventions and technology to scale products and services that have, previously only been available to really wealthy people. You can leverage how people think and behave in ways that nudge their behavior and to things that are financially better for them.
[00:18:30] So one product that we worked on is called prize link savings. It was legal in some places until 2014. When we have a law signed by president Obama, which is it was considered gambling, which is silly. And the idea is that you put savings into a pooled account. And then once a month there's like a drawing and someone wins the interest on that.
[00:18:48] So you keep your principal, you don't lose your principal, but you can award the interest as A lottery. So it was considered gambling, which meant that a lot of banks didn't want to touch it. And so we got a law passed to change that. And I think I saw [00:19:00] that, you could construct a program based on incentives and say Hey, if you save 250 bucks a month, you get a chance to win $5,000.
[00:19:07]that's really interesting to people. And so we say that it's so hard to get people to save, but it's really just that we don't have the right incentives. So that was the opportunity side. The challenge side, I think, was that. They focus so much on behavioral invent and incentives and like behavioral adjustments.
[00:19:22] That they missed a lot of the opportunity of what I think technology can actually do here. And that was the whole thing I mentioned about automation and about like auto enrolling people into 401k is worse. Like we get, we can do so much and like trying to nudge people into getting 401ks, but at the end of the day, if we're just like, what if we just default you into it?
[00:19:40]like what if we just like use technology? Like the core mechanic that makes catch work is that every time you get paid. We set aside a percentage to the things that you tell us to. So taxes, retirement, time off those sorts of things. Yeah. you don't have to do anything. The technology is the automation.
[00:19:58] And so like [00:20:00] incentives can take you only so far. And at some point we need like tech to do some heavy lifting for us because we're human. So that was the moment that I think a lot of pieces started moving from me in terms of this grand theory of ultimately what has become catch.
[00:20:13]And you didn't start it. You joined join. it was, we were, I think we were a year prelaunch. The team was a couple of people, it wasn't like we were bootstrapped at that point, no venture funding, but my co-founder like. He reached out. I had another job. I was like pretty happy there.
[00:20:36] And so when you reached out, I was just like, I was like, I'm going to need a lot of money. let me just throw out a salary number. And he's not a problem. And within five minutes on the phone, and by the way, it wasn't actually that much money. I was just like dramatically underpaid.
[00:20:48] Cause I'd been in non-profits it's like trying to correct for that, but. he, within a couple of minutes was just like, Oh, you have the right background for what I'm looking for. Which, honestly, to this day, he is amazing at [00:21:00] hiring people. It's like a skill that I'm still trying to build. He is fantastic at it.
[00:21:03] Like he just knows how to see the right things and people for roles that like other people might overlook. I wasn't Ivy league, I didn't come from one of the things like I didn't have anything that would necessarily tell you just from a piece of paper that I was the right person for this job.
[00:21:16] And so he reached out and he told me about what they were working on and. It was just like a whole lot of things. Just like clicking. I don't know if it was like a Rubik's cube or it was just like all these things that I was like, Oh, wait a minute. Like these huge trends, uniting automation and behavioral principles, like putting all this stuff into one place, yeah.
[00:21:34] That's how this has to be done. You can't do it piecemeal. You can't do it like one feature at a time. Like the last decade of FinTech has been really about just like building features, like acorns is a feature, right? Like when they started, it was like we round up money, right? It's 2020. You can no longer start companies that are features who have to start building with this idea of a platform and this idea of broader engagement, because one it's just really expensive to acquire, but right.
[00:21:57] Anyway, I like saw that [00:22:00] and was like, okay, yeah, I can do that. And I was like, you know what, worst case scenario, if we aren't able to raise any money or anything, like it's a couple months, it's a good experience. And, I thought that was like the worst thing that could happen. it's so interesting that it's, you can build a entire companies around how it's really hard to get someone to do something that's just good for them.
[00:22:22] Vegetables versus painkillers. VCs are like, we don't want to invest in vegetables. And I'm like, maybe you shouldn't, maybe we should figure out a system that doesn't make it so that you could never invest in something that's actually good for people. And you just want to push opioids on them.
[00:22:35] Like metaphorically speaking the VC, say this all the time. They're like, it has to be a painkiller. And I'm like, yeah. But look at our society with painkillers. Like I don't think that's all we want. I think it, part of that, like painkiller thing is about selling. You're selling your product into a previously existing buying motion.
[00:22:59] So you don't [00:23:00] have to go and foot the bill for like market education. It's Oh, the market understands how to buy a lot of painkillers. So sell something like a painkiller into that buying motion and you will. See growth, rapid growth. And I think you fit into that. We're trying, it wasn't instant, right?
[00:23:19] It's been four years. Like we've been working on this for a long time. Like really hard to get people to eat their vegetables. It is, we're trying to be sweet green, right? Like you gotta be the vegetables that are like sexy. to take the analogy literal, I subscribed to sun basket, which mails me really healthy meals.
[00:23:38] Yeah. And I say a sponsor of the podcast right now. I wish I like three a week, three meals a week. And I think my, let's say I've done it for 10 weeks. I think I've cooked, unfortunately like 21 of them and the other just don't get cooked. I know this food is good for [00:24:00] me. Yeah. But door dash is also really easy to use.
[00:24:03] Yep. Yeah. I, that is such a great analogy. I think that's, that is one of the challenges with what we're doing is that we are trying to bridge that gap and that's where automation comes in, especially on financial services. Is that okay. You don't have to actually make it, what if we just shipped a really healthy meal to you three times?
[00:24:20]it's really hard for me to put money aside before I pay Netflix. Like that. that's happening in a, not real, whatever it is, time that I don't know of because it's automatically deducted from my account. So something has to do that for me. And there you are to do that.
[00:24:41] And it's working because I saw your tweet today that this period of this important period for you guys, which is open enrollment has paid off substantially. And it like a really different cost to acquire a customer than like last. Yeah. Yeah. It is really hard [00:25:00] again in a, in an industry where you're somewhat of a market maker, right?
[00:25:04] Like we can talk about competitors, but There's no one-to-one copy of us. And obviously everyone says that, but even just the capabilities we offer are three separate companies. So to talk about what we offer. So we're kind of market makers in some way, which is expensive, right.
[00:25:18] Market education, like you said, we really insistent on knowing our customers really well, partly because there's such a. Big market that we can serve. We didn't want to get too far removed from our customers, especially early on. And so everyone will tell you, don't ever acquire directly, like always find channels, always find aggregators.
[00:25:37]that's always the way that you're supposed to go because it's cheaper. But early on, we just refuse to do that. And I, and honestly, I don't know that was the wrong decision. Because we know our customers so much better now it helps us build the right channels. And we were serving 87 million people.
[00:25:51] You need to know which ones like, w where are you starting? Like, how are you approaching like independent contract, like dentists or independent contractors or dentists our customers, maybe [00:26:00] someday, but not right now. And so I think it was like, we have been able to take some time and learn, and that's where, we've been really fortunate and raising.
[00:26:07] Pretty significant capital for our stage to be able to one build a really good product across a lot of different pieces to explore and experiment on, go to market. And that means that now we're entering our second open enrollment. So the first time we did health insurance was a year ago and entering our second open enrollment, we now know what we're doing and we know how to do it, and we know the places to go.
[00:26:28] And I think it's just, it just takes some time and again, VCs are not the most patient people. And so I think it's been, it's definitely been a challenge and a stress on us of we know we're doing the right things. And the question is just can we buy enough time? Can we raise enough money and buy enough time to get to where we know we need to be.
[00:26:45] So you used to pay to learn more quickly and yeah. And then you did what everyone says is impossible. Everyone says paid is like crack you cold [00:27:00] Turkey, quit crack to some degree. It sounds like to get that cost down to where it is today. But congratulations on overcoming your potential addiction.
[00:27:10] Yeah. Pay. Yes. truly that is a great way to describe it. Pain is such a, Because it always works. It never doesn't work. It's just it works at what cost, like one of the challenges is that so many other channels, they can be somewhat binary. Like we worked with NPR, we did an NPR ad.
[00:27:25] Cause we were just like, let's just see if it works. Cost five grand. We got four signups from it. Like it was just, it just didn't work. It just didn't work for us. And maybe there's a certain size, maybe there's a certain scale. But the thing is, if you put five grand into Facebook, like I'm going to get way more than four users.
[00:27:39]And so there's this mentality of technically paid is more efficient, But this experimentation through channels and through different types of acquisition, is absolutely necessary. And so I think, we. We are basically cold Turkey. Like we don't use paid to acquire customers.
[00:27:54] What we do and what I think was an important realization for us. And every company is different, but We [00:28:00] use, we pay money to Facebook and again, not very much, couple hundred bucks here and there to boost content. So we'll make content we'll post blogs, and then we'll put $200 towards like boosting that audience.
[00:28:10] We'll retarget. Some of our users who haven't converted, we'll do stuff like that. And that is way cheaper. you can put stuff on, I think even Twitter and Facebook and Instagram, and like optimize for like likes of your page. And then you've got a bigger audience. And so it's it's not just about using those channels, acquire your ultimate revenue generating user.
[00:28:29] It's like using them to build the top of funnel. And that was all new for me. Like I'm a product person. I am not a marketing and go to market person. So I think it's been like a learning experience of trying to. Figure all that stuff out and it's definitely, I wish it should be three months.
[00:28:43] It took me 12 taking a long time. Crazy. it's not like Facebook or Twitter want their users to click off necessarily, so you're gonna pay them. Totally. Oh, that's great. Okay. So do you remember the [00:29:00] moment when traction accelerated, where you were like, Oh, this we cracked. We crack the code. Such a good question, because the answer is no, the answer is like definitively.
[00:29:16] No, it's I feel and maybe this is just one of those things that five years from now, this is all going to be a big failure and I'll look back on and be like, see, I should have known, but I feel like people act like product market fit is a binary. And as of right now, I don't believe that it is.
[00:29:30] I believe it is that you start to see shoots and then those shoots, I feel like it's more like growing a tree. And then at some point you're like, that's a tree. Is that a tree? That's a tree. And you can see that's not a tree. And you can see that there's like a binary of, is there a tree or is there not a tree, but there is this like the process of it growing and Building.
[00:29:48] And maybe it's partly because our product is a platform. So we don't have one thing that people fit with. there's like we have to manage percentages of what percentage of people are adopting health insurance versus tax withholding. And does the whole system [00:30:00] work, which is maybe a little bit different than something that's just a simple SAS product.
[00:30:04] Yeah. But I think that, I don't feel like there has been one moment. I feel like there have been like lots of little things that like build evidence and give more confidence. Maybe that's also because I tend to be a skeptic and a cynic, like just personality wise and not willing to like, Lean too far into Oh, it's completely figured out.
[00:30:20] Which again, my Twitter persona might make it seem like I'm like, it's completely figured out, but it's we're learning and we're building and we're growing every day. Yeah. It's like a product market fit. Is this like hindsight thing, you look back on it and you said, there's this tree. And it's a, I had a conversation with another founder who was like, okay, so we have this like widget.
[00:30:40] We wanted to build this like widget. And it's like not real complex. It's probably just a feature. But it turns out people freaking love to this little feature, and now we have this huge data set. So now what we are is this, we have the world's largest, like neural net of blah, blah, blah, blah, blah, like [00:31:00] VC, VC vocabulary insert here.
[00:31:03] And it's not like you woke up one day and you're like, I'm going to create the world's largest neural net of data as a result of this little widget. Like you look back and said, We stumbled upon, I think it was Steve jobs, graduation quote, that was like, you can't connect dots forward only backwards.
[00:31:22] And he was talking about like his career and he's you can look at me as like the children of immigrants and but you CA it's more like you have to look backwards. And I think that's what happens with a lot of really successful companies. It's like people look back, they look at all the dots and then they write this crazy narrative over it.
[00:31:39]Makes like 50% true, right? no, you made a path there, the narrative today and it makes everybody else in the world, damn, they're so smart. I could never start. Totally. I'm just not founder material. I just don't see what they, I don't see all those patients. Yeah. You made up half that. [00:32:00] Oh, that's great.
[00:32:01] So you've raised almost 10 million.
[00:32:04]I don't know how much of that was already on board when you joined versus yeah. Okay. So you raised all that.
[00:32:14]tell me about what the pitch was when like first money came in and like where the product was at that point in time. Yeah. So we did bootstrapping for a while.
[00:32:23] So we raised 10 million, but like we had money before that too, because we were doing some consulting work. It's this is a big undertaking that we've built. the initial pitch. This is like the it's so funny to say this out loud. Now we knew we needed to raise $10 million to get to our series.
[00:32:38] A and so we went around pitching for $10 million. My co-founder and I are nobody's right. we had no like exits of note, neither of us had we weren't number four at Stripe. And so people were like, are you serious? You're like asking for $10 million. We know. And we're like, that's how much money we need.
[00:32:55]that's how much we need. And so this, that started probably in early 2018 graduate in you [00:33:00] like, yeah, like how much money do I need? This is what I need. Here's what I want to do. And here's the money I need to do that. But that's just not how the market works. especially if you're a female founder, like nobody's going to give you $10 million unless you've proven yourself.
[00:33:13] And again, as a female founder or you've proven yourself more twice. so I think we were really picky. And so we got the feedback that 10 million was too much, but we knew we needed to raise five. We were just like, look, there is no point in us raising a million bucks like that. Like we should shut down rather than raise a million dollars.
[00:33:32] And the thing is we just, we knew what we were trying to build and letting a VC change the roadmap so dramatically by saying Here's a million dollars come back with some amount of product market fit. Like we were just like, that's just not going to work. Like it just isn't. So we actually, the first tweet I had that went viral was actually a story about our initial fundraise, which was we had a bill outstanding from our consulting work for about $400,000, a lot of money.
[00:33:59] And it was a [00:34:00] big client. And so we had this bill outstanding and we hit Christmas time of 2018 and we just had Payroll is still going out. We had 11 people at that point, 12 people, maybe. So we're spending a fair amount of money, just keep the team afloat and Christmas hits. So our client just disappeared and they're like, yeah.
[00:34:18]we'll get you. And we're like, no, like you don't understand, like we need this $400,000. this is what's going to keep us alive through Q1. And we had been fundraising and failing at fundraising because I wasn't driving urgency or whatever it was. I was supposed to be doing like. I just, we, we thought that the money would come.
[00:34:35] I don't know. I think there's a South park meme or a South park episode that like has been MIMA five, which is the, like these little Elvis in a tree. And they're like, step one, steal underpants, like step two, question Mark, step three, profit. And they're like, all we have to do is figure out step two.
[00:34:49] And I always talk about how fundraising is like that for me, which is it's meet with investors. Question Mark. Sign a term sheet. And it's what the heck is that question, Mark? what is the thing that it [00:35:00] happens between the meeting and the term sheet? And I think that was something, especially in the first time fundraising that I just didn't get.
[00:35:05] So anyway, we had been failing at fundraising. We were out this money. We were just pretty sure that if the check hadn't cleared by the first week of January, that we were just gonna shut the company down, we were just like, all right, we didn't do it. We didn't figure it out. We'd been live for four months.
[00:35:19] So like we had launched and we like had been in marketing. We had four months worth of data, which isn't a ton, but it was some, and one of our network connections, who's now an angel investor, but didn't want to give us money at that time because we were like a ship going down and he told us to apply for Y Combinator.
[00:35:33] So we got into YC a week before it started. They flew us out over Christmas. Like we were there for new year's. We interviewed that day and YC started the next day. That is what made everything come together? We closed a million dollars the day that we like signed the YC agreement and the 450 K check cleared.
[00:35:51] So we just immediately got that little bit of money and to allow us to continue to exist. But it was really like down to the like, Oh, another 24 hours. And we would just. Told [00:36:00] everybody that we were going to give him two or three weeks severance and just closed it. And yeah, just the resurgent of resurgence of the Elon Musk tweet about his story around Christmas.
[00:36:11] Yeah. It's like everybody's done around Christmas. Don't ever show the show is over for if you're trying to kick off a fundraise right now. Yeah. even now it was the beginning of November. Yeah, it's done. Yeah. so we brought in that million, but again, we knew we needed the five and so we raised the 5 million on top of the one.
[00:36:31] And so we ended up closing out a Y Combinator with 6.1 in the bank, which was great. That was like, we're like, okay, that's enough for us to get started. I would have loved that 6 million could have taken us to a series. A, but this is big. And like we said, we spent money like acquiring and learning our customers and learn it.
[00:36:47] Like we, we made progress and we hit milestones and we generated revenue. And we did all that, but we raised a little bit more money over the course of the what, 18 months, since we raised that round. And so we've brought in some more money. So we're now at [00:37:00] 9.6 and we're going to be raising the series of next year.
[00:37:01] So it's a lot of money to have raised. But what's just so ironic about all of it is I'm like, man, if someone had really believed in us, they could have just given us the $10 million and how much money would I have frickin saved, not having to fly across the country to fundraise and all the time that I wasted and all of that stuff, like we knew we needed $10 million and we just, it out.
[00:37:20] We tried to tell you that we need, we did you didn't believe us. So we were in a really different place than I think a lot of companies that go through it. We had a team of 12, so my co-founder and I flew out from Boston, which is where we're based and lived out there for 10 weeks. But the whole team was still here.
[00:37:40] And so it was interesting that we were doing stand-ups every day at 6:00 AM, right? to just stay on schedule with the East coast. And I think that just made it really different for us because like we had a real company, like there are a lot of YC founders that like have an idea and it's just, they're just the co founders are like maybe one employee.
[00:37:56]And so I think for us, it was like, it was a tremendous [00:38:00] opportunity. Great network truly drove urgency in our fundraise in ways that like nothing else ever had, but it wasn't. I was also over 30. I feel like if I had been like 24 or something, it would have been a different experience, but it was just like a lot of really very young.
[00:38:15] And so a lot of people were just like, we're going to hang out and drink tonight. And I was like, yeah, like we got standup at 6:00 AM hangovers now. Yeah. so it was a good experience, but I think we also, our batch was really big. We had, I think we were actually one of the last batches before they went remote, but we had, we had 500 people.
[00:38:33] There's 200 companies and 500 people. That's like a college class, right? Like that's you don't form these really close bonds. And I felt like every time we went to an event, I met new people. So it was like hard to form relationships because there were so many people at every time it was like your first meeting.
[00:38:47]and so I don't know. I think I really value it for the network and some of the connections that we've made from that, but it wasn't. It wasn't like the collegial experience that I think a lot of people would told us it was the company [00:39:00] needs numbers from Y Combinator. No, cause they're all in the West coast.
[00:39:04] That was the other thing is we didn't want to have a team that was split. We, I know this is contrarian in 2020, but like we really value in person like co located teams. But cool. So speaking of team building, do you have any tips for team building? You mentioned your founder. Has this uncanny ability to find the right person for the right role, like Moneyball style without Ivy league stamp of approval or the Fang membership.
[00:39:33] So I'm curious if you have any sort of insight into what gives him that uncanny ability. Yeah. Yeah, I think Moneyball is a good way to describe it because like I thought I was asking for a ton of money and he was like, Oh yeah, no problem. And I was like, shit, I should ask for more. I was like, wait a minute.
[00:39:49] What? But I think. Hiring really one of the hardest things that you do to start up when will always ask you this question, keeps you up at night? Or what are you afraid of? What are you worried [00:40:00] about? they always want to get that because they want to know what they should be worried about.
[00:40:03]thing is you have to be so careful on the answer. sometimes if you're too transparent, they're like, Oh shit, that is scary. And they won't invest in you. So the answer that I always give is maybe like giving away too many of my tricks but the answer that I always give, because you just can't debate it.
[00:40:18] It's team, it's having the right people in the right spots at the right time. And that's the thing that I think is most difficult. And it's true. like I do think that is the hardest job that I have as CEO is finding those people, keeping them happy. your trajectory at a startup is so steep that the right person in the right role can change really quickly.
[00:40:36] And it's like, how do you keep strong enough relationships to be able to be honest about that and all that sort of stuff. So that's always the answer I give because it's it's. It's good. And it's real, but it's not like frightening. It's not Oh, we're worried that the Supreme court is going to get rid of the ACA next week.
[00:40:50]if I tell them that, I'm worried that the Supreme court is going to get rid of the ACA, they're gonna be like, Oh yeah, we're not gonna invest it. So in terms of like also giving them a great thing to tweet five minutes later, [00:41:00] That's the hardest thing, People the right time. Yeah. So I think what my co-founder does. So interesting and I wish I could replicate it. I don't think I've been as successful at it. Is that he is really good at seeing the essence of what the role is. I think there, you make a long list in your head and that not everyone's going to have everything.
[00:41:18] And so you're making trade offs, especially at a start up because you can't often afford the perfect candidate or the supposed perfect candidate, but it's like, what is the essence of the role? And what are the non-negotiables like, what are the things that like we can't negotiate on?
[00:41:30] And oftentimes the things you can't negotiate on are less about the role and more about the like personality. And those are the things that often are hardest to like assholes. no asshole, like someone who's comfortable with ambiguity. what's interesting is that because we started bootstrapping, we actually had a lot of really early team members who didn't have the right personality because they had a full salary from day one.
[00:41:54] I was included in that, by the way, like I had a salary, but yeah. Sometimes it was like, there was this mismatch of it's five 30, I'm going to [00:42:00] go home. Work-life balance is really important, right? and it's not that we want to work people until midnight every day. It's just that like the DNA of being comfortable with ambiguity being okay with the fact that like things aren't always going to be super clear is almost more important than most technical skills in most roles.
[00:42:16]and I think that's the thing that we've come to realize is that hunger like. Ambitiousness like comfort with ambiguity. Like all those things you can't train. Like you can't teach people how to have those. and that potential is you're saying any more for potential. You can call it the Moneyball thing, but that is it's that Delta that you're looking for of I don't want to hire the perfect person for the role that I need.
[00:42:37] Now. I want to hire the person who like this company six months from now is going to look different and I want to hire this person to be there at that time. So you're like trying to like. What does it, I'm sure there's like a physics analogy of you're trying to like, shoot a rocket and have it like hit something at the right time with a satellite.
[00:42:51] And that's kinda what you're trying to do on a startup team, which I think is fundamentally different than like how big companies hire you versus yeah. Yeah. [00:43:00] This makes a lot of sense because, so in my current day job turns out I don't podcast for my day job. Yeah. I work at a really small startup and
[00:43:09]And I'm curious if that meets your like customer profile. Yeah. I think people miss sometimes like how many people catch conserve and the different types of people that it's helpful for any, that's why we like struggle with sometimes the key marketing statement, benefits for people who don't have benefits from an employer a little bit wordy, and it's an anti statement, but I think what that is meant to describe is that it is often startup founders.
[00:43:35] It is often people who are early employees at startups. It is people who don't have these things taken care of who like. Like technology and want an app that sort of makes it easy, especially for health insurance. I think the ability to have a tool that can help you compare plans, get the best deal.
[00:43:50] Like we help people enroll in the tax credits that they're qualified for. So if you happen to be a founder and you're not paying yourself a ton of money, did you know that you can get a huge discount on health insurance through the [00:44:00] ACA? So I think that those sorts of things can be really helpful, even if people like don't.
[00:44:04]they don't self identify as like gig worker or independent contractor. This is something that really is meant to go much bigger than that. Yeah. And income is getting weird these days. It's you can be a straight up like employee. But have written something, some like guide that you sell on gum road and like you wake up one day and it went viral and now you, you have 20 grand that you need to pay taxes on or something like that.
[00:44:33] So but that is exactly that's the trend that we see continuing, right? Like we, and maybe it's just because we work in financial services, but we don't see the story of the gig economy and the independent economy as like jobs. We see it as income streams. because there are all these ways to monetize your assets and your knowledge, and like all these other things you have.
[00:44:53] And so as you add in multiple income streams, all this stuff gets way more complicated, right? Like taxes and like [00:45:00] retirement and like just making sure it's all set up and it's all automated. that is what the next decade is going to be like. It's very uncommon. I think it will be very uncommon for people to have just like a single income stream that they earn consistently every two weeks.
[00:45:12] Does it, I don't know if you ever heard this from your like high school career counselor who, I was considering, yeah, I was considering like a gap year after high school. And that was just like suicide, Yeah. So I wanted to go to Yale and I got rejected. I'm a Yale reject. And so I told my parents that I was going to take a year off and they just laughed. They were just like, ah, like what does that even mean? They're like, what are you going to do? And the thing is I didn't have any good answers. So I think that was probably part of the problem is that I didn't actually like, yeah, I don't know yet, but yeah.
[00:45:51]used to be much more. Like you had to go well, and then of course our generation now, like they just put us in college and told us to get degrees. And now everyone has a policy degree is [00:46:00] like hugely in debt and has no idea why they told me if I went and got a degree. Yeah. It's crazy. It's funny.
[00:46:08] You didn't know, but all of a sudden you're a founder. I'm curious if you, if you always knew that you were going to be, how did you know you were going to be a founder? did you always think about yourself that way? I still often don't think about myself as a founder. I think I think it's an important part of my role.
[00:46:26] And I think there is certainly an identity that I've taken on to solve this problem. But a lot of times, like I think people were really into startups and startup culture. Sometimes they, they have that, They have that, the person who, when they were eight years old, they knew they wanted to be a teacher.
[00:46:42]a lot of entrepreneurs are like, I always knew that I wanted to be an entrepreneur. I have to work for myself. I'm a, I'm the boss. I definitely didn't have that feeling. I've worked for other people for most of my career. And I think that There's different approaches to why you were an entrepreneur and why [00:47:00] you are a founder.
[00:47:00] And for some people it is because they want to found something and there's nothing wrong with that. Creating is awesome. Like starting companies is awesome for me, it was that I wanted to solve a problem. And the best way for me to solve that problem is by founding a company and by leading a startup that solves that problem.
[00:47:19] So I think it just There's an importance to recognizing there are many paths to being an entrepreneur and that no angle of it is right or wrong. And I think as we think about Making space for different types of founders and people who have like parents, for example, can you, there are people who like start companies when they have like little kids.
[00:47:33]I don't know how, but like we should make space for different types of founders. Like the sort of stereotype of the 23 year old guy, who's got a computer science degree who goes and works in a garage for two years and then makes millions of dollars, That is such a small percentage of what founders are and who founders are.
[00:47:49] And I think it's just like important to know the stories that can make up like different backgrounds. And I think there's a, I don't know her she wasn't in my match, but there's a YC founder. Who has two small children. [00:48:00] And she went through YC when she had two small children. And I think just like stories like that are so important around, like, how do you think about it?
[00:48:07] And like, why did you do it? And there's just a lot of different pathways to becoming that sort of entrepreneur, founder, visionary type person. And none of them are inherently better than the other. And I think that's just like something that has made the journey like lonelier for me. And so I hope that people know that there is.
[00:48:24] There are a lot more people out there than that. I think the number one founder in the country is like a small business owner, right? Like it's not a VC backed startup. And then someone who just owns a small business. And so I think that we just have to broaden our definition and our reach for those sorts of things.
[00:48:40] Make these pads easier too. there's founders who, I know one, one woman who like cares for her ailing mother, like who's on the older side. At the same time that she has her company. So it's like a lot. Yeah. Yeah. There's a lot. People are living life. And [00:49:00] honestly, I, again, I don't believe one way is better than the other, but I do think it's important for all of the types of companies that we need started.
[00:49:07] We need different points of view on who's starting them. And so I think that can come through in culture and that comes through in hiring. And that comes through in all of these different things in the problems that we're choosing to solve. If everyone who's starting a company looks exactly the same, the types of problems we're going to solve get pretty mundane.
[00:49:24] And I think that's like having that experience of knowing we have someone on our team who was, I think she was born in Ecuador, but raised here by her grandmother. And as we started our health insurance build. She just made a lot of really important points about assumptions that we all made about nuclear families.
[00:49:40] And I think that's just like such an important thing. Oh, the person who you're applying with might be your grandmother and not your mother. And it was just like, that sort of perspective is so important in like how we solve problems and how we like make tech more. Yeah, totally. Okay. is there anything you want to tell anyone who [00:50:00] may be in need of benefits right now?
[00:50:03] catch.co is our website. We're also iOS and Android catch benefits. We are super available. One of the things that I'm most proud of our team is that we consider like our support and engagement team, part of the product. So we take a lot of pride in that we have people available to like answer questions and be helpful.
[00:50:20] And they are not like some outsource call center. They are like real people who live and work in Boston and make tech salaries because we think it is that important that we have people who are like really highly trained. And yeah, so like we're available to help and open enrollment ends in most States on December 15th, that's an important deadline.
[00:50:36] Some States have extended it, but. Just go for December 15th, get it done. And that's how you can get covered for 2021 that's catch.co/something health got catch.co health.gov for health insurance. Yeah. Awesome. thanks for your time. This has been awesome. Thank you so much.