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Roadblock Recovery Insights with Jeremy Hanks, DSCO Founder
6 Plays4 years ago
If you haven't hit a roadblock on your startup journey then you haven't actually started. Roadblocks are a predictably unpredictable part of starting a new venture and this episode dives into the minds of Jeremy Hanks, founder of DSCO and investor Dalton Wright, to explore how our approach to those early challenges to our businesses can bring us even closer to a perfect pitch. This episode explores:
How founders can navigate early roadblocks
Jeremy's uphill battle with Dsco's near close
An investor's viewpoint on when a founder is backed into a corner
How flashes of brilliance can sometimes do more for your company than months of work
Recommended
Transcript
Introduction to the Podcast
00:00:00
Speaker
If you haven't hit a roadblock on your startup journey, then you haven't actually started.
00:00:04
Speaker
Roadblocks are the predictably unpredictable part of starting a new venture.
00:00:08
Speaker
And today we're talking with Jeremy Hanks, founder of Disco and investor Dalton Wright, about how our approach to those early challenges to our businesses can bring us even closer to a perfect pitch.
00:00:27
Speaker
What is Perfect Pitch?
00:00:28
Speaker
It's a podcast from Kickstart that reveals the minds of both investors and entrepreneurs throughout a startup's journey.
Meet Jeremy Hanks
00:00:35
Speaker
So whether that's uncovering what everyone's really thinking during a startup pitch or learning how entrepreneurs like you have managed their first major roadblock, Perfect Pitch is an honest, quick, and tactical guide to help you on your startup journey.
00:00:51
Speaker
I'm your host, Karen Zelnick, and I'm excited to introduce you to today's guests.
00:00:55
Speaker
First, our founder, Jeremy Hanks.
00:00:58
Speaker
Jeremy is the founder and executive chairman of DISCO, and this is the third company you founded, correct, Jeremy?
00:01:04
Speaker
Yep.
00:01:04
Speaker
Awesome.
00:01:05
Speaker
And all of them focus on adapting supply chain management.
00:01:07
Speaker
So you have a really great perspective.
00:01:09
Speaker
on not only what it's like to be a founder over the course of 20 years, but also very specific insights into the evolution of supply chain.
00:01:16
Speaker
And I love that.
00:01:17
Speaker
I love when founders find their passion and their passion isn't just entrepreneurship in general, it's your passion.
00:01:22
Speaker
So you're passionate about supply chain.
00:01:24
Speaker
I think I am.
00:01:26
Speaker
And I would say that I am because of this entrepreneur arc over the last 20 years.
00:01:31
Speaker
I think when I was growing up on a dairy farm in Southern Idaho, I do not think that I would have said, hey, in the year 2020, this is what my expertise, right?
00:01:40
Speaker
Like my passion would be, but that's where I've landed.
00:01:43
Speaker
And you also mentioned that you're a budding naturalist, an avid reader, and you dabble in writing poetry.
00:01:49
Speaker
So my real question and my first question for you, Jeremy, is like, is there anything that you can't do?
00:01:55
Speaker
I throw that stuff in my bio so that it seems like I do things other than supply chain and e-commerce.
00:02:01
Speaker
But I do.
00:02:02
Speaker
I love nature.
00:02:03
Speaker
I took a program from Utah State University, their Utah Master Naturalist program.
00:02:08
Speaker
It was pretty cool.
00:02:10
Speaker
Oh, that's awesome.
00:02:10
Speaker
And yeah, I like to mess around with rhymes.
00:02:14
Speaker
I'm a huge fan of alliteration, you know, where words start with the same.
00:02:18
Speaker
No, I love alliteration too.
00:02:20
Speaker
So this is going to be a great discussion.
00:02:21
Speaker
Throw a lot of them in there.
00:02:23
Speaker
It's going to be awesome.
00:02:24
Speaker
Okay.
00:02:24
Speaker
Yeah.
00:02:25
Speaker
Anyone who knows me knows that I'm somewhat addicted to Post-it notes.
00:02:29
Speaker
I single-handedly keep the business 3M in business.
00:02:32
Speaker
And I like to dabble on Post-it notes.
00:02:35
Speaker
So I call myself the Post-it poet.
00:02:37
Speaker
I figure if 3M would sponsor me as the Post-it poet, maybe we could take it mainstream.
00:02:41
Speaker
I mean, did you make a TikTok about it?
00:02:43
Speaker
Because I feel like you've got something here.
00:02:45
Speaker
Yeah, I stay away from TikTok just because of the whole like Chinese communism spying overlord type thing.
00:02:51
Speaker
There's that.
00:02:52
Speaker
Yeah, I don't trust.
00:02:53
Speaker
I don't trust the social media.
00:02:55
Speaker
Okay, I'm sending you Post-it notes after this because I also love Post-it notes.
00:02:58
Speaker
I'm a big fan of the neon ones.
Meet Dalton Wright
00:03:00
Speaker
And super sticky Post-it notes are garbage because when you peel them off, they're so sticky that it curves the top half inch of the note, the force of it.
00:03:11
Speaker
And then when you stick them down on a surface, they don't lay flat.
00:03:14
Speaker
They're all like tipped.
00:03:15
Speaker
It's rubbish.
00:03:16
Speaker
It's garbage.
00:03:17
Speaker
Yeah, stick with the normal, original Post-it note.
00:03:21
Speaker
So that's my rant.
00:03:21
Speaker
Do you hear that, Freya?
00:03:23
Speaker
Do it.
00:03:24
Speaker
And before we get on another tangent about post-it notes or alliteration, because I could talk about both all day, let's introduce our venture capitalist, Dalton Wright.
00:03:33
Speaker
He's a partner at Kickstart Fund who's passionate, among other things, about helping founders pursue their vision.
00:03:39
Speaker
Your work with startups goes back to the beginning of Kickstart, right, Dalton, when it was founded in 2008?
00:03:43
Speaker
Yeah.
00:03:43
Speaker
Yeah, I was lucky to join Gavin early on before anybody cared about seed stage investing in Utah.
00:03:49
Speaker
And really, we had this ambition to be the fund that would be the early risk-taking supportive group that would write checks where nobody else would take that type of a risk on unproven first-time founders.
00:04:02
Speaker
So I was very much attracted and drawn to the blank slate nature of entrepreneurship.
00:04:09
Speaker
The earlier you go, I guess it's more open what these companies could become.
00:04:14
Speaker
And so I've always really loved this stage.
00:04:16
Speaker
And yeah, I've been with Kickstart since 2008.
00:04:20
Speaker
When I first joined, I did some other things in the interim.
00:04:22
Speaker
So I haven't been at Kickstart for the past decade.
00:04:24
Speaker
But I rejoined at the tail end of Fund 2 and helped raise 3, 4, and 5, which is the current fund that we're investing out of.
00:04:31
Speaker
Yeah,
Jeremy's Supply Chain Journey
00:04:32
Speaker
which is awesome.
00:04:32
Speaker
And in the interim, you were getting your MBA from Wharton and you were also helping start Mexico's first early stage tech fund.
00:04:38
Speaker
Is that correct?
00:04:39
Speaker
Yeah, that's right.
00:04:40
Speaker
So Gavin taught me the trade, the craft of seed stage investing.
00:04:45
Speaker
With that skill set, I spent a couple of years in Mexico raising the first seed stage slash Series A fund in the country.
00:04:51
Speaker
It was called Alta Ventures.
00:04:52
Speaker
It was a really novel fund in the country.
00:04:55
Speaker
And
00:04:55
Speaker
spent some time raising that and then came back to do grad school at Penn and did a dual degree called the Wharton-Lauder program, which was just a really kind of highlight of my life so far.
00:05:05
Speaker
Oh, so cool.
00:05:06
Speaker
And anything else that you would like entrepreneurs to know about who you are or what you do?
00:05:10
Speaker
I guess what I would want entrepreneurs to know about me is that I am very easily excitable about big ideas.
00:05:16
Speaker
That's kind of... If I have any great skill set, I guess it's that I can quickly catch a vision and quickly ramp up in my excitement with an entrepreneur.
00:05:25
Speaker
And I have to temper that with the analysis and trying to check myself on really...
00:05:30
Speaker
what could go wrong in these companies and what the risks are that we're facing.
00:05:34
Speaker
But I love dreaming with founders.
00:05:36
Speaker
I love being able to imagine a different world.
00:05:39
Speaker
And my career is meaningful because I get to meet people like Jeremy who are dedicating their lives to solving big problems.
00:05:45
Speaker
And I get to go on those journeys as a support.
00:05:48
Speaker
I'm not taking all the risk.
00:05:49
Speaker
I'm not the one who's the hero of any of these stories by any stretch.
00:05:53
Speaker
But I love my position, being able to just work with people who are making the difference, the prime movers.
00:06:00
Speaker
And I get to help them take their visions and turn them into reality.
00:06:05
Speaker
Oh my gosh.
00:06:06
Speaker
I love that.
00:06:06
Speaker
This is going to be such a good discussion.
00:06:08
Speaker
So for all those entrepreneurs listening, if you want to know more about Dalton, about Jeremy Hanks or Disco, we'll have more info for you in our show notes at kickstartfund.com.
00:06:17
Speaker
Let's just dive right into the discussion.
00:06:19
Speaker
Jeremy, why supply chain?
00:06:22
Speaker
Talk to us about founding Disco and your previous companies.
00:06:25
Speaker
Why supply chain?
00:06:26
Speaker
So back in 98, 97, 98, I was talking to a couple of friends of mine and then I got one of them in particular.
00:06:33
Speaker
We started a business and the idea came about to sell skis on the internet.
00:06:39
Speaker
It was a ski swap.
00:06:41
Speaker
So if you're in the,
00:06:41
Speaker
snow sports world, you probably know about ski swaps.
00:06:44
Speaker
You go to a high school, you buy skis.
00:06:47
Speaker
And I thought, like most people, that a lot of those skis are individuals selling their skis to other individuals.
00:06:53
Speaker
But there are these niche businesses that buy closeout skis from manufacturers and from retailers.
00:07:00
Speaker
And so it's a business that is dealing with this distressed inventory.
00:07:04
Speaker
And I knew some family...
00:07:07
Speaker
kind of acquaintances growing up in Southern Idaho, the Masoner family, and that's what they did.
00:07:11
Speaker
They would buy closeout skis, thousands and thousands of pairs from K2, Rossignol, all of the big manufacturers in the spring.
00:07:19
Speaker
And then in the fall, they would drive all over the Western United States and sell these skis at ski swaps.
00:07:24
Speaker
And so that was...
00:07:25
Speaker
Like, let's do this on the internet.
00:07:27
Speaker
Let's do that.
00:07:27
Speaker
It started as a ski trade.
00:07:30
Speaker
And then that ultimately turned into gear trade because we became more generic.
00:07:33
Speaker
And that put me onto this road of dealing with inventory problems, inventory distortion, you know, closeout problem.
00:07:40
Speaker
You know, what is a closeout?
00:07:41
Speaker
It's like, hey, we bought 100 pairs of skis.
00:07:43
Speaker
We sold 70 of them.
00:07:45
Speaker
We have 30 left.
00:07:47
Speaker
But it's March, it's April, nobody wants to buy skis.
00:07:50
Speaker
And next year, the new models are coming.
00:07:52
Speaker
So that inventory becomes distressed, right?
00:07:54
Speaker
Like we have to get rid of it and make way for the new stuff.
00:07:57
Speaker
That is what my career and kind of this arc across three companies has been dealing with is this idea of inventory distortion and inventory distress for retailers and for the manufacturers, distributors, you know, and the brands.
00:08:12
Speaker
At the end of GearTrade, we were trying to make it go.
00:08:14
Speaker
And what we came across was a distributor in Salt Lake City called Liberty Mountain.
00:08:19
Speaker
And they're like, hey, it'd be interesting to help with closeouts.
00:08:23
Speaker
But what we really need help with is dropshipping.
00:08:25
Speaker
And we were like, what's dropshipping?
00:08:27
Speaker
We didn't know.
00:08:28
Speaker
And they said, well, dropshipping is where we as the supplier, we as the manufacturer slash distributor, the wholesale side of the equation, we have the inventory.
00:08:38
Speaker
We're going to hold that inventory on behalf of a retailer.
00:08:41
Speaker
The retailer is going to sell something that they don't have or own.
00:08:45
Speaker
And then once it sells to the consumer, we'll culminate the wholesale side of the transaction.
A Pivotal Moment for Disco
00:08:50
Speaker
And then we will ship it directly to the consumer.
00:08:53
Speaker
And it was being driven by a lot of the
00:08:56
Speaker
PurePlay e-tailors, Planet Outdoors, Alltrek, Backcountry.com.
00:09:01
Speaker
And I remember thinking, okay, if a retailer did dropshipping, only dropshipping, they would never have this 30 pairs of skis that never sold, right?
00:09:10
Speaker
Like the closeout problem for retailers goes away.
00:09:12
Speaker
Hey, let's go tackle that problem.
00:09:14
Speaker
That became DOBA.
00:09:15
Speaker
We started that in 2002.
00:09:17
Speaker
We were the fastest growing company in Utah.
00:09:20
Speaker
From 2003 to 2007, we were number 23 on the Inc.
00:09:21
Speaker
500 because we learned it.
00:09:22
Speaker
That's amazing.
00:09:25
Speaker
We landed at this time where there was this democratization of e-commerce selling online, eBay power sellers.
00:09:31
Speaker
So we kind of exploded in this product broker, virtual distributor, dropshipping type company called Dova.
00:09:38
Speaker
And then in 2012, we saw an opportunity to take the technology that we had built for ourselves to run Dova and to commercialize that for other retailers and manufacturers and brands in the broader kind of consumer supply chain, consumer e-commerce industry.
00:09:55
Speaker
And so in 2012, we spun the technology out into a new company, which wasn't called Disco, but was what became Disco.
00:10:03
Speaker
So we're coming up on nine years ago is when we did that technology spinoff.
00:10:08
Speaker
So it's kind of one thing led to another, led to another.
00:10:10
Speaker
And now we're in... And here we are today.
00:10:13
Speaker
Yep, here we are today.
00:10:14
Speaker
The amazing company that you're running.
00:10:15
Speaker
That's awesome.
00:10:17
Speaker
What was your perspective on Disco when Jeremy came to pitch it?
00:10:21
Speaker
Well, I actually wasn't in the original pitch meeting.
00:10:24
Speaker
So I rejoined Kickstart.
00:10:25
Speaker
So as I mentioned in the intro, and so it was a new investment in the portfolio.
00:10:30
Speaker
I joined the board as it was within probably the first year of Kickstart having made the investment.
00:10:35
Speaker
So I wasn't the one who originated or saw it or made the original investment decision, but I joined the board as a kind of newly returning member of the Kickstart team.
00:10:45
Speaker
Yeah, I remember I got a call, the former Kickstart team member and our board member, we would meet every month for breakfast.
00:10:52
Speaker
And it was like, hey, that's all over.
00:10:54
Speaker
Meet Dalton.
00:10:56
Speaker
He's your new guy.
00:10:57
Speaker
He's your new point person.
00:10:58
Speaker
I was like, all right, let's figure this out.
00:11:00
Speaker
So it was an interesting way that Dalton and I came together as far as working through Disco and Kickstart.
00:11:06
Speaker
And I joined at a time where it wasn't totally obvious where the company was going.
00:11:10
Speaker
You know, it was making progress, but there were a lot of question marks and roadblocks that the company was facing.
00:11:16
Speaker
And so it wasn't a join.
00:11:18
Speaker
And while this is exactly what I expected from any venture investment, it's just, you know, up into the right or anything like that, you know, it's the reality of startups.
00:11:27
Speaker
Probably during that time, everybody was looking at Jeremy thinking, man, just raised another round.
00:11:32
Speaker
Guys kind of repeat success already.
00:11:35
Speaker
But on the inside, as you're dealing with the actual problems of the company, it's pretty sobering
Overcoming Startup Challenges
00:11:40
Speaker
what has to be done and what we're up against.
00:11:43
Speaker
So let's talk about roadblocks.
00:11:45
Speaker
Every startup has them.
00:11:47
Speaker
Dalton, you were just kind of mentioning a few of them.
00:11:50
Speaker
So Jeremy and Dalton, let's get into some of the roadblocks that Disco was up against in these early days.
00:11:55
Speaker
It was interesting for us because we should have expected the roadblocks, but we didn't.
00:12:00
Speaker
We came out of Doba.
00:12:02
Speaker
We were kind of a well-known company.
00:12:04
Speaker
My picture had been on the cover of all of the Utah magazines and stuff.
00:12:08
Speaker
And we had all this technology.
00:12:10
Speaker
We had a team of 11 people who most of us had spent a decade on this problem.
00:12:14
Speaker
We culminated a seed round with Kickstart only a few months into it.
00:12:19
Speaker
And we grew our team to almost 20 people.
00:12:21
Speaker
And I mean, it was kind of off to the races.
00:12:23
Speaker
We kind of assumed- You were up and to the right, it seemed like.
00:12:25
Speaker
Just kind of like going there.
00:12:26
Speaker
We just assumed that we had this thing figured out and dialed and it was just going to go.
00:12:31
Speaker
But then, you know, reality kicks in and you raise capital.
00:12:34
Speaker
And, you know, whether you raise a million or 10 million or a hundred million, that's only so much capital, right?
00:12:40
Speaker
And so there's a certain amount of time and progress you need to make.
00:12:43
Speaker
And coming into 2014, so, you know, we took two and a half, three years
00:12:47
Speaker
we just kind of realized this is not, there's not going to be success here.
00:12:51
Speaker
We knew that we needed to do something different.
00:12:53
Speaker
We didn't know what it was, but we for sure knew we needed more time.
00:12:56
Speaker
So that was really difficult because we scaled the team way back.
00:13:00
Speaker
Oh, that's such a tough call.
00:13:01
Speaker
We had to buy time.
00:13:03
Speaker
And as we engaged with the market, I think we had lost sight of,
00:13:07
Speaker
of some of what we learned, right?
00:13:10
Speaker
So we had this foundation of dropshipping and retailers and brands, and we had this thesis of what the industry needed, where the world was going to go.
00:13:17
Speaker
And as soon as we started engaging with the market, we lost sight of a lot of that.
00:13:22
Speaker
With hindsight now, I can see that it started to mirror the supply chain software integration industry that exists today, which we feel is like super, super, super broken.
00:13:34
Speaker
So we got pulled in different directions and really were struggling.
00:13:38
Speaker
We were approaching this window of time at the end of 2014, where I started to wonder, are we going to just have to call this?
00:13:45
Speaker
Like, are we just going to have to pull the plug?
00:13:47
Speaker
Yeah, and I would just add my perspective on was, you know, what I was experiencing as a new board member.
00:13:53
Speaker
Joining a company that had tons of potential, I mean, the market size and the opportunity to me felt very apparent.
00:14:00
Speaker
But the consumers were not buying the product.
00:14:03
Speaker
For those that were consuming it, there was a lot of custom work that was being done.
00:14:08
Speaker
Didn't feel like we really had kind of a repeatable product.
00:14:10
Speaker
And as we were doing this work to develop out the product to meet the different needs of the customers, we were expanding kind of the complexity of the product.
00:14:18
Speaker
And so, you know, actually, in some ways, it became harder for the next customer to consume because there was additional complexity built in the product that previously served another customer that no longer was relevant to the next customer.
00:14:30
Speaker
And so what Jeremy did effectively, and I think some of this is just
00:14:33
Speaker
the nature of the focus that can be imposed upon a company when resources are dwindling, when time is running out, that the company had to, one, buy more runway, but also eliminate all extraneous activities, features that they can no longer support, and boil the product
00:14:51
Speaker
down to a core offering that could be consumed from a base level entry point.
00:14:56
Speaker
And I think that's really when the company started to notice that they were figuring something out.
Keys to Success
00:15:00
Speaker
That was another, I'd say, early lesson that I observed was that when you're trying to serve both sides of your marketplace,
00:15:06
Speaker
You can easily overbuild different features for both sides when at the end of the day, what Jeremy and Disco discovered is that there were some key customers that if they could get one side of the marketplace buying into their network model, they had the power to bring their trading partners with them onto the network.
00:15:23
Speaker
And so it was, you know, kind of a prioritization.
00:15:25
Speaker
They had to focus down on who cared the most, who was willing to really fight for this technology to exist in the market.
00:15:32
Speaker
And in finding the answers to those questions, they found the partners that have been relentless supporters of the business that are fully bought into what Disco is trying to do.
00:15:41
Speaker
And that was a process to get to that point, of course.
00:15:45
Speaker
Yeah.
00:15:45
Speaker
Jeremy, can you talk us a little bit through that process?
00:15:48
Speaker
So in 2014, you're like, maybe we pull the plug.
00:15:50
Speaker
One, how do you shift your mind to be like, we're going to keep going?
00:15:53
Speaker
And then two, could you walk us through that process Dalton just kind of talked about?
00:15:58
Speaker
Yeah.
00:15:59
Speaker
Yeah.
00:15:59
Speaker
So it was a really interesting time.
00:16:01
Speaker
It seemed like we had uncovered more what wasn't working, right?
00:16:05
Speaker
Like what not to do versus what would work and what we should do.
00:16:09
Speaker
Even for me personally, it was kind of this like, okay,
00:16:12
Speaker
I did dropshipping type stuff for 10 years at DOBA.
00:16:14
Speaker
Now we're three or four years into this one.
00:16:17
Speaker
And it's been a battle.
00:16:18
Speaker
Do I have another, even maybe bigger battle in me?
00:16:21
Speaker
Yeah.
00:16:22
Speaker
And we were at this point of extreme necessity.
00:16:26
Speaker
We had to either give up or somehow scrap and find a way to power through.
00:16:32
Speaker
I went on a trip to Costa Rica with my family over Christmas in 2014, and I had no technology.
00:16:37
Speaker
I left my phone home.
00:16:38
Speaker
I had a little notebook, and I didn't think about our problems a whole lot.
00:16:42
Speaker
But on the flight home, I couldn't sleep, and I filled the notebook with a lot of thoughts and ideas.
00:16:49
Speaker
and came back and said, okay, maybe this is too little too late, but I just felt a huge obligation to our investors to not give up until maybe the bitter end.
00:17:01
Speaker
If we had not had investors,
00:17:04
Speaker
I would have pulled the plug.
00:17:05
Speaker
I would have bailed.
00:17:06
Speaker
So I had the support and kind of that expectation from investors.
00:17:11
Speaker
And so we started 2015.
00:17:13
Speaker
Here's the plan.
00:17:14
Speaker
We're going to simplify.
00:17:15
Speaker
We're going to standardize.
00:17:17
Speaker
We're going to focus on a level playing field.
00:17:19
Speaker
Those ideas, it became what we called the disco ball project.
00:17:22
Speaker
It was this...
00:17:25
Speaker
There were seven of us working six, seven days a week to relaunch the technology.
00:17:29
Speaker
And a lot of it is we just got rid of things.
00:17:31
Speaker
We deleted two thirds of the fields in our database because they had never had any data in them.
00:17:37
Speaker
So everything came together and we had clarity of the strategy.
00:17:41
Speaker
We had clarity of how it would go to market.
00:17:43
Speaker
We kind of saw the future.
00:17:45
Speaker
We were able to build what we needed.
00:17:46
Speaker
And that was on us, right?
00:17:48
Speaker
And we had a major...
00:17:49
Speaker
support from our investors and our board, our head of sales at the time.
00:17:52
Speaker
He believed a little bit even more than I did because I kind of was leaning to and preparing myself.
00:17:58
Speaker
We're still going to have to wind this thing down.
00:17:59
Speaker
It's just going to be later in 2015 or early 2016.
00:18:03
Speaker
And then what the universe did is they brought Nordstrom, right?
00:18:06
Speaker
Nordstrom came along.
00:18:08
Speaker
I mean, what a thing to bring though.
00:18:10
Speaker
Nordstrom.
00:18:11
Speaker
Yeah, I think it came mostly.
00:18:13
Speaker
I mean, I've talked to my wife a lot about this.
00:18:14
Speaker
I'm a very fashionable person.
00:18:16
Speaker
Anyone who knows me knows I'm high fashion.
00:18:18
Speaker
It's not like
Conclusion and Thanks
00:18:20
Speaker
I grew up on a farm and I wear shorts and t-shirts at all.
00:18:22
Speaker
It's like I am put together well.
00:18:24
Speaker
We ask all of our new team members at Disco, what retailer represents your personality, right?
00:18:29
Speaker
Nordstrom would probably be maybe not even on my list, right?
00:18:33
Speaker
It would be REI, Cabela's.
00:18:35
Speaker
Because you're a naturalist.
00:18:37
Speaker
Yeah, a budding naturalist.
00:18:38
Speaker
Probably Sir Le Taub.
00:18:40
Speaker
I mean, just a lot of people probably before Nordstrom.
00:18:42
Speaker
But Nordstrom came looking for something different in how they work with their brand partners.
00:18:48
Speaker
And this was where I didn't think we would get Nordstrom just because of the complexities of working with a company that big.
00:18:56
Speaker
At the time, they were running a dropshipping program with 1,200 of their most important brand partners.
00:19:02
Speaker
So think of the company's Nordstrom sales product.
00:19:04
Speaker
for, that's the list, right?
00:19:06
Speaker
Like the biggest names in the fashion and apparel industry.
00:19:09
Speaker
It was hundreds of millions of dollars of consumer sales.
00:19:13
Speaker
And here we were, seven of us here in Utah, trying to launch this new thing.
00:19:19
Speaker
It was halfway done.
00:19:20
Speaker
And at the end of August 2015, we had less than $5,000 in the bank.
00:19:26
Speaker
September 27th of 2015, Nordstrom signs a contract with our company to basically move their entire dropshipping program over to us.
00:19:35
Speaker
There were a few individuals at Nordstrom, one in particular, Chris Keppel.
00:19:39
Speaker
They really, really put their necks out on the line and they aligned to us as a scrappy entrepreneurial company who could help them do things that the traditional vendors, the traditional solution providers would not be able to do.
00:19:55
Speaker
And then we had another maybe year, year and a half of like, oh my gosh, how do we actually make this work?
00:20:01
Speaker
How do we deliver this realignment of our solution, our technology, and our strategy?
00:20:07
Speaker
How do we deliver that to a best-in-class enterprise retailer?
00:20:11
Speaker
And there were continuous points along the way where it could have all gone off the rails.
00:20:16
Speaker
And somehow it all came together.
00:20:18
Speaker
And then 2016 turned into 2017.
00:20:23
Speaker
to have some interesting opportunities and it's really just built since then.
00:20:27
Speaker
Jeremy, I loved all of that.
00:20:29
Speaker
As you were talking, I could just feel the grit and the determination and the passion that entrepreneurs have to have.
00:20:35
Speaker
And I can see you on the plane writing in your notebook and coming back and being like, okay, we're going to do this.
00:20:41
Speaker
We've got a commitment to investors.
00:20:43
Speaker
And then Dalton, as the investor, could you sense that as well?
00:20:47
Speaker
How were you looking at this situation?
00:20:49
Speaker
And were you feeling a little bit the same in 2014?
00:20:51
Speaker
Like, oh, maybe we're going to have to close?
00:20:54
Speaker
Oh, absolutely.
00:20:55
Speaker
It would be very rare for an investor to ever have more conviction in an investment than the founder himself or herself.
00:21:02
Speaker
I mean, at the seed stage, there's not really the opportunity to recruit a new management team that maybe is checking out because who's going to have a better vision than the original founder, right?
00:21:12
Speaker
You know, as the companies mature and they get to product market fit and they're ramping revenues, then you can start to think about, well, you know, let's bring in talent that can help accelerate this company and take it to the next level.
00:21:24
Speaker
But if you're dealing with a novel, new approach to a longstanding problem, and you bet on a person who had the unique insight and the particular passion to go after those, to not have somebody like that in a company would just be devastating.
00:21:39
Speaker
And so I don't think I'm sharing too much.
00:21:41
Speaker
This is just part of the story of Disco, that there was a point in time where we as a firm approved a $50,000 additional check to have an orderly shutdown of the company.
00:21:53
Speaker
You know, that's what we thought was going to happen because we were talking to Jeremy and we had stalled out and who else was going to write an investment in the company.
00:21:59
Speaker
And had it not been for Jeremy, we never would have continued to write checks into the company.
00:22:05
Speaker
I think for us, you have to know that you have a founder, you have a real entrepreneur.
00:22:09
Speaker
You can have good ideas, you can have good products, interesting markets.
00:22:13
Speaker
But for us as really early investors, if you don't have the person who cares about it more than anybody else on the planet,
00:22:19
Speaker
it's going to turn into a job for somebody when it gets hard.
00:22:21
Speaker
But for Jeremy, this was a mission that he was on.
00:22:24
Speaker
And so nobody was going to work harder in figuring this out than Jeremy.
00:22:28
Speaker
And that was certainly the case.
00:22:30
Speaker
And so for us, it was an example of a company that still had a lot of potential.
00:22:35
Speaker
It looked like it was not going to turn out the way that we hoped.
00:22:37
Speaker
And that is, even with the best teams and the best plans, a lot of startups still fail, right?
00:22:42
Speaker
And so it wasn't like, oh, how could this possibly have happened?
00:22:45
Speaker
It's always hard.
00:22:47
Speaker
I think, to Jeremy's credit,
00:22:49
Speaker
He was the one who refused to throw in the towel and to wave the white flag.
00:22:53
Speaker
So he says that, you know, if he hadn't had investors, maybe he would have quit.
00:22:56
Speaker
But I kind of doubt that.
00:22:58
Speaker
I take you at your face, you know, at your word, Jeremy, but I also know how determined you are and how grit it does define you.
00:23:06
Speaker
That's something that you look for when you're writing the first check in a company is, is this a founder that, you know, is going to care about this long after other people have gotten tired because it's taking too long or it's hard.
00:23:17
Speaker
And as investors, if you don't have that person, you do have to move on.
00:23:22
Speaker
And Dalton and I had a conversation.
00:23:24
Speaker
I still remember it was the 4th of July, 2015.
00:23:26
Speaker
And the conversation we had is we're both board members outside of anything else.
00:23:31
Speaker
So we have a fiduciary duty to look after the organization.
00:23:34
Speaker
And that includes all stakeholders.
00:23:36
Speaker
It includes investors.
00:23:37
Speaker
It includes the founders and the team.
00:23:39
Speaker
It includes customers.
00:23:40
Speaker
And then we had a different investor who said, you know, no, you fight to the very end.
00:23:45
Speaker
And so we did.
00:23:46
Speaker
And so we took annual renewals from some of our current customers into the summer and fall of 2015, not for sure knowing whether we were going to have to wind this thing down.
00:23:56
Speaker
But I definitely look back on that period where I relied on some strong support from investors and from team members.
00:24:03
Speaker
Because I think personally, even though I was ready to fight more, I kind of had started to very much feel like I was fighting...
00:24:13
Speaker
And it was too little too late.
00:24:14
Speaker
My wife, Amy, could tell you about the times when I would have my breakdowns and I'd get emotional and I'd cry and I'd be like, we should just shut it down.
00:24:22
Speaker
It was a challenging year.
00:24:25
Speaker
And then the spark came in Nordstrom and Dalton helped us engineer a way to get some financing so that we had some chance with Nordstrom.
00:24:32
Speaker
Nordstrom became a strategic investor, became an amazing partner.
00:24:36
Speaker
A lot happened over that 2014, 15, 16.
00:24:37
Speaker
And then the company started
00:24:40
Speaker
kind of then said, okay, 2017 on, you know, so the last three years has been more about how do we build this to go do what we set out to do almost 10 years ago.
00:24:49
Speaker
Dalton, Jeremy, thank you both for this conversation because this is the reality of a startup.
00:24:55
Speaker
It's approving closeout costs.
00:24:57
Speaker
Jeremy, it's you feeling like you have to shut down the company and needing to rely on strong team members sometimes.
00:25:03
Speaker
All the ups and downs of the startup world, this is the reality.
00:25:07
Speaker
I'm like emotional about all of that that you all just shared.
00:25:10
Speaker
It is.
00:25:11
Speaker
It is the grit and this stick to it.
00:25:14
Speaker
But any entrepreneur who doesn't credit, whether you call it luck or providence or fortune or the universe or God or whatever, you have to give credit to the fact of being in the right place at the right time is a major part of any startup success.
00:25:31
Speaker
And so, yes, we take credit for showing up and fighting.
00:25:36
Speaker
But there were weeks or days or months where one little thing goes one way or the other.
00:25:41
Speaker
And we're doing a postmortem on how did disco fail versus how did we succeed?
00:25:46
Speaker
So I think it's good to keep humble.
00:25:49
Speaker
Those are the personality traits that allow you to be gritty.
00:25:53
Speaker
And when I think about grit as well, I also think about the ability to provide leadership, even in the face of overwhelming odds.
00:26:03
Speaker
That story that Jeremy shared of disconnecting and coming back with a surge of new ideas, I think the entrepreneurs out there ought to listen to that, that it would be tempting to hear the word grit and think, well, I just need to keep...
00:26:14
Speaker
plugging away and beating my head against this wall until finally it gives way.
00:26:18
Speaker
And Jeremy actually realized that doesn't work, right?
00:26:21
Speaker
You burn yourself out and you don't necessarily get to a new novel insight by trying to just keep doing the thing that wasn't working.
00:26:28
Speaker
This is not a story of let's just keep pushing, pushing, pushing and see if something gives way.
00:26:33
Speaker
Had Jeremy not created the mental space for himself to then be able to do a sprint, a very creative sprint, he could have continued doing the same thing that eventually would have just
00:26:44
Speaker
caused us to grind to a halt and we wouldn't have actually found the path forward.
00:26:47
Speaker
So it's important for entrepreneurs to understand that those flashes of brilliance can be as valuable as several quarters of trying to do the same thing over and over again.
00:26:57
Speaker
it's like creative grit.
00:26:59
Speaker
It's like, hey, hard work is great, but if I can have a machine do something that I would do on the farm with a shovel, let's have the machine do it.
00:27:08
Speaker
It's like a creative approach to being gritty.
00:27:12
Speaker
Yeah.
00:27:12
Speaker
I love that.
00:27:13
Speaker
This has been such an amazing discussion.
00:27:16
Speaker
Jeremy, thank you and Dalton so much for your vulnerability and honesty on the realities of what
00:27:21
Speaker
happens when you hit a roadblock in a startup and you keep going.
00:27:23
Speaker
And Jeremy, I just have one last question for you.
00:27:26
Speaker
And I would love to know, like, what is the single most effective practice you've found that's had the greatest impact on your success?
00:27:34
Speaker
Can I say two things instead of one?
00:27:37
Speaker
Yes.
00:27:37
Speaker
Okay, so the two things I think that's had the most impact on my success is, first of all, acknowledging and being humble about the success and not letting my ego get too big.
00:27:53
Speaker
There are a lot of people around entrepreneurs, team members, partners and spouses, investors, customers, strategic partners.
00:28:03
Speaker
And so acknowledging that it's a very complicated puzzle that has to come together.
00:28:08
Speaker
And then second, that trip that I did to Costa Rica, where I just really disconnected, I've done that every year.
00:28:16
Speaker
I've had some investors really get freaked out when I told them subsequently that I was going to take three weeks in Vietnam with no access to technology.
00:28:24
Speaker
Literally, you can't get a hold of me.
00:28:26
Speaker
And hopefully the wheels don't fly off the bus.
00:28:29
Speaker
Not Dalton, I should say, but a couple other ones.
00:28:31
Speaker
It's like, you can't leave.
00:28:32
Speaker
You're the founder of this startup.
00:28:34
Speaker
But yeah, really disconnect entirely.
00:28:37
Speaker
No technology, no news, no social, no anything.
00:28:40
Speaker
And in my opinion, it needs to be at least two weeks, 14 days.
00:28:43
Speaker
You need to do that once a year.
00:28:45
Speaker
Dalton, any final thoughts for entrepreneurs?
00:28:48
Speaker
What I see in Jeremy and what I've seen in this company is a consistent North Star reason for existing.
00:28:55
Speaker
So it's not that they're just out there because they want to build a business together and they want to make money and they want to have success or anything like that.
00:29:03
Speaker
I think those are all elements of the overall picture here.
00:29:06
Speaker
But Jeremy, you've maintained a consistent vision for what you're trying to do in the world.
00:29:10
Speaker
It's evolved a little bit, but I think you're still pursuing the same original vision that you had and it's being validated as you go.
00:29:20
Speaker
I think also, when you look at companies that
00:29:23
Speaker
really kind of managed to make it through some really tough times where it's not just an obvious, hey, everything's going great, we figured it out.
00:29:30
Speaker
I think the flexibility while also maintaining that core focus of what you're trying to accomplish is important.
00:29:37
Speaker
So those are kind of dual things that have to coexist.
00:29:41
Speaker
One, the flexibility to choose new ways to address the problem.
00:29:44
Speaker
At the same time, if you don't really have a clear vision of the problem to be solved or why you should exist,
00:29:50
Speaker
you'll quickly fade out along the way as you're in the middle of interim movements in the business.
00:29:55
Speaker
And you can forget why we're even in business in the first place.
00:29:57
Speaker
And I think that's what Jeremy has done effectively for this company all these years, is he's the keeper of the vision.
00:30:03
Speaker
Thank you both so much, Dalton and Jeremy, for being on the episode with us today.
00:30:07
Speaker
The thing that I had impressed upon me again while we were talking is something actually Dalton has mentioned about like, this is the refiner's fire of like 2014.
00:30:16
Speaker
You think you're gonna have to close down.
00:30:18
Speaker
You're on the plane back, not sure what you're gonna do.
00:30:20
Speaker
Like that is the setting where entrepreneurs thrive.
00:30:24
Speaker
And Jeremy, you're just like such a witness to that.
00:30:26
Speaker
And I'm just was so impressed with that.
00:30:29
Speaker
And also just both of you being so vulnerable in the conversation.
00:30:31
Speaker
So thank you both so much for that.
00:30:34
Speaker
And of course, thank you for listening as we dive deep into what it takes to create the perfect pitch and a strong foundation for startups.
00:30:40
Speaker
If you want to learn more about our investor Dalton Wright from Kickstart or our founder Jeremy Hanks and what he and his amazing team are doing at Disco, we'll have a link to the company and a longer bio in our show notes at kickstartfund.com.
00:30:51
Speaker
We'll be back next time with more insights from entrepreneurs and the investors who fund them.
00:30:55
Speaker
So be sure to subscribe so you don't miss a thing.
00:30:58
Speaker
You can listen to more episodes of Perfect Pitch wherever you listen to your podcast, Apple, Spotify, Stitcher.
00:31:04
Speaker
And if you like what you're learning, leave us a review.
00:31:06
Speaker
See you next time.