Facebooktwittergoogle_plusredditpinterestlinkedinmail

What single Louisville company is part of the same fraternity as Airbnb and Dropbox? It’s a company called WeatherCheck, and they now are an alumnus of the prestigious Silicon Valley accelerator Y-Combinator. They’re the first and only Y-Combinator company to date from Kentucky!

Demetrius Gray, Founder of WeatherCheck, and Co-Founder Jermaine Watkins recently returned from their 4-month stint with the accelerator, and it has proven to be an amazing accelerator for their company.

In this podcast, I have an in-depth conversation with Demetrius and learned:

◊ more about his background and how he became and entrepreneur,
◊ how WeatherCheck got started and raised early seed capital,
◊ how they got into Y-Combinator,
◊ what they learned from Y-Combinator that can apply to our startup community, and
◊ where they’re headed.

This is a must-listen podcast for our startup community and aspiring entrepreneurs.

 

Transcript (This was machine transcribed. Please forgive the typos.)

Alan: 00:00:01 Hi everybody. Welcome to the MetroStart podcast. This is Alan Grosheider, and today I’m interviewing Demetrius Gray. He’s a founder of WeatherCheck and the first Louisville area company to, I think. right Demetrius, ever get into Y-Combinator?

Demetrius: 00:00:18 Yeah, man. The first actually in the state of Kentucky. Wow. Yeah. Yeah. That’s, wow.

Alan: 00:00:25 That’s pretty amazing because that’s one of those, if you’re an entrepreneur, you’ve heard of y Combinator and you’ve heard of Airbnb and I guess Dropbox and some of the big companies that have gone through y Combinator. So congratulations man. That’s amazing.

Demetrius: 00:00:39 Man. It was, it was a heck of an experience. I mean we, uh, we were out there for like three months and I’m like, I’m just telling you, you know, I’m out there still once a month for about a week at a time and um, it’s been really cool to kind of, um, build a little bit of a bridge to the bay area, um, with a heck of a lot of access.

Alan: 00:01:02 Yeah. And I think I’m excited because it seems like that access is going to be good for other companies in our area, since you guys are pretty tied into the startup community. And in fact, you know, you and I have, have, have some combined founders and, and you know, I, hopefully it’s going to be good for the whole startup community. It’s those connections kind of take off. Okay. All right, well why don’t we start, let’s kind of get an idea about, I like to find out what got somebody started being an entrepreneur and it seems like there’s a lot of common common denominators that, you know, got somebody that made somebody want to be an entrepreneur. So I’m just curious, you know, about growing up and what got, what made you want to be an entrepreneur? Would you do, what was your, your childhood like were you an entrepreneur as a kid? Those sorts of things.

Demetrius: 00:01:54 Yeah. So, um, so you’ve heard of the Book Rich Dad, Poor Dad? Yeah, I probably will eventually write a book called Black Dad White Dad.

Alan: 00:02:06 Okay.

Demetrius: 00:02:08 Um, my mother actually married a, um, petroleum engineer, white guy from, um, uh, central California, um, Stanford educated, um, petroleum engineer. Um, his, his, his father actually had invented the horizontal drill, um, for the oil and gas industry, which really kind of, um, opened my world. And then, um, my, uh, grandmother on that side, um, her father had invented a form of die casting, um, called Granger’s. Dot Casting and southern California. And so, um, it was really my first sort of foray into entrepreneurship, having watched to them I’m running oil and gas proliferation company, um, that was eventually sold to Halliburton. Um, then, uh, before that, um, then watching my, my great grandfather Harlow’s, um, die casting company, um, pass success simply through generations and eventually be sold. Um, and so, you know, every meal was about sort of like what’s going on in the business.

Demetrius: 00:03:23 And so I had a, um, an early front row seat, um, to, you know, that life. So obviously eventually came out. I actually steered clear up the oil and gas business. I really wanted to start by wanting to go to medical school. Um, but then got the accounting, uh, and, uh, um, eventually ended up in a business of my own. But, uh, yeah, that’s, that’s, that’s where the impetus come from. I mean, I still talk to my dad and grandfather nearly every day, um, just about what’s going on at whether Jack and has a gun and, you know, um, those sort of encouragement that every entrepreneur needs to kind of keep going. Um, anybody who’s, for instance, the old Facebook knows, like, they’ll see this old white guy who signs every post poppy father who’s like encouraging me to keep going. But I mean, I’m so grateful to them for, um, they’re just continuing to pour into me and believe in, uh, you know, what we’re building. So, yeah.

Alan: 00:04:34 That was that. So is your dad or Stepdad or was it,

Demetrius: 00:04:38 yeah, so take me as my Stepdad and, uh, yeah, I mean, but you know, by marriage, you know, just lucky hitting, um, um, eventually came to find out that my biological father had his own sort of entrepreneurial journey in the franchise business in and a South Carolina. And, um, I was able to reestablish the relationship with him and years later, um, in my teenage years. And, um, and so he’s had a considerable amount of entrepreneurial success in the franchise space. And so, um, with Lyndie’s and chick-fil-a and, and so, yeah. You know, just, uh, kinda crazy that, uh, that no matter where I looked, there was this sort of entrepreneurial energy, um, that I guess I was sort of predestined for.

Alan: 00:05:35 I see. You’ve got the jeans. Yeah. It’s interesting because there doesn’t seem to be a whole lot of rhyme or reason to people deciding to people becoming entrepreneurial. It almost seems like a Jean because there, I’ve talked to a number of people who had no entrepreneur ism in their family there. Their parents were teachers or professors and they grew up, uh, you know, we’re with nobody really being an entrepreneur in the family and they just had that drive. And then in your case, it sounds like there were entrepreneurs all over the place as you were growing up.

Demetrius: 00:06:11 So the little town that I grew up in, in western Kentucky Madisonville I mean, there’s so many entrepreneurial people there. Um, I, you know, I don’t think they know what we have in some ways. Um, I don’t know if you don’t have the business locally and liberal Mercer transportation. It is owned by a guy named her Blegen whose also from my hometown of Madisonville, Kentucky. Um, and he sold his other Trump Ligon transportation to Landstar trucking, um, which was a huge sale. Um, and so, and her bloops that and like, well, this is great dude. Um, and, uh, then, you know, loud donuts from down and engineering here in Louisville. Huge outfit of forensic engineers. I’m number two in the country, I believe also Lau don’t an engineering started in Madisonville, Kentucky. Uh, so it’s a weird sort of place. Um, but the entrepreneurial spirit there in terms of building or, um, you know, you look at Brook, bluegrass pharmacy started there. Um, you know, just these sort of juggernauts of companies that kind of come out of that area of the state. But yeah. And then obviously Steve Bryshere, uh, his family originally from Hopkins can, where it’s space. So I know them very well. So yeah.

Alan: 00:07:36 That’s interesting cause it seems like a lot of times in those, in smaller towns, there’s one sort of boss hog cat and guy that that owns everything and everybody else works for him. But it sounds like that town, you know, spinning off a lot of entrepreneurs.

Demetrius: 00:07:51 Yeah. I mean they’re doing a wonderful job at it and, and um, you know, I think, I don’t even know if they realize how well they’ve done that daily, exactly that. But, um, but yeah, you know, I wouldn’t try to do it for anything.

Alan: 00:08:05 Is there anything there that you, you see that, that helps push that along, that, that creates that atmosphere?

Demetrius: 00:08:12 No, it is, um, I think the, there’s a certain freedom in that community to explore and to be, um, I spent, you know, childhood riding my bike around town and going to the local hamburger shop. And it almost sounds like I grew up in the 1950s, but you know, it just, it just was a great town to grow up in. You know, there weren’t really many limitations. Like I didn’t, I didn’t feel like there was any sort of, uh, racial animus towards success, you know, that, you know, you’d think small town, you know, Western Kentucky that, you know, I’m not, certainly there weren’t a whole bunch of black role models or anything like that, but, but, um, you know, like you, if you were relatively smart and you know, for the most part everybody wanted you to succeed, you know, and um, and, and so I had a lot of help from the community, kind of helped get me off to college and all that good stuff.

Alan: 00:09:18 I think that’s probably so important is the, just drilling into somebodies head that it’s possible no matter, you know, what their background is. If somebody grows up in an atmosphere where people are around them acting like it’s not possible. That’s kind of what you think. And if, if you grow up with people always just saying you can do anything you put your mind to, I think maybe that’s, I think that’s probably the deciding factor on whether a kid grows up to, to be more entrepreneurial or, or we’re just more success minded to feel like they can do whatever they put their mind to. Wow.

Demetrius: 00:10:00 And I think there’s just so much energy of people who have had considerable amount of wealth from coal mining families, which is very common in western Kentucky. Um, the minds created so much wealth for those, you know, where’s that, there is a sort of energy around, okay, what’s going to be the next thing? Um, and so, so that, that was just always a, a real area of opportunity for me. So,

Alan: 00:10:29 yeah. So what brought you then to Louisville? How’d you end up?

Demetrius: 00:10:34 No. Um, I always knew that I wanted to move to the big city and, and I really did think that that would be progressively moving beyond believable to be entirely truthful. But I met my wife here. She’s from Louisville. She went to, um, male high school and met her the third day of Undergrad. And, um, you know, having not, um, known to many, um, upper middle class black families. I met her family. I was like, oh my gosh, this is, these are the Cosbys. And literally what I didn’t know at the time was that there actually is a real cost to the family. Um, really, um, he’s a basketball think Stephen’s Church and, and I mean they are president of Simmons College and, and, uh, uh, they’re a great family. But, um, uh, you know, the Crockers to me were, you know, uh, the closest thing I’d ever seen.

Demetrius: 00:11:35 And, um, I really, and I tell her this today, I said, you know, I fell in love with your family first. Um, and then, um, and so, um, you know, that’s been wonderful. So, so, um, you know, we dated all throughout college and kind of stuck around here. I have always really, always had a secondary home, um, for wherever I’ve been working at the time. I was never one of those ones who really called Louisville, you know, 100% of the time home. Uh, and so even like today where I spend the week a month in San Francisco, it’s not uncommon to what I’ve been doing for probably the past 10 years. So looked in, um, uh, Scottsdale, Arizona, um, Boston. Um, where else? Kansas City, Missouri, um, Chattanooga, Tennessee, Knoxville, Tennessee. You know, a few other places like that. So yeah,

Alan: 00:12:35 I think that’s becoming more the norm now of people. Younger generations are just much more mobile. My daughters, that way, you know, she went to school and in Europe and it’s just finishing up over there and it’s, it’s just travels all over the place. And I’m trying to get to a point now where all my business stuff is set up so that I can work from anywhere and just, uh, you know, kind of keep us small home base and, and work from wherever I am and just travel around and see things I think. I think that’s a fun way to live.

Demetrius: 00:13:10 Well, and I’d love to say that I would had, I saw all of those lessons. I really didn’t. Um, um, I was in the storm contracting business and so most of the reason that I was in those locations was because of a major natural disaster. And so, um, most of the time was spent, you know, a dawn to dusk, um, you know, fixing some disaster. And so, so I, I wouldn’t say that I’ve been a lot of places than all 50 states in 50 countries, that sort of thing, but, um, but really haven’t had the chance yet to really explore those areas were all that they offer. Um, and so now I think that’s the new phase of my life as he built this sort of tech company. And, and I just had the first glimpse of that recently. I went to Puerto Rico for just a quick respite and I was like, wow. It was the first kind of time that I’ve felt like, hmm, maybe I ought to work from somewhere else and everything’s still be okay. So yeah,

Alan: 00:14:21 keep a toe in Louisville. So we need the good entrepreneurs here to our, uh, our entrepreneurial community.

Demetrius: 00:14:30 Oh. So my maternal side of my family has been in the state since, uh, I think 18 of two. So, um, so we’re not going anywhere anytime soon. What about us going anywhere?

Alan: 00:14:47 Yeah. So, uh, talk about how you, what you did before you got out of that. You went through University of Louisville and then what was your path to becoming an entrepreneur? Now?

Demetrius: 00:15:00 I was in the PNC excel, uh, which was, you know, going to change that trend. Business bankers and you know, junior business bankers and a retail branch managers and about that time was the PNC national city merger. Um, and I hated that. I really, um, you know, it was just about that time the banking crisis was happening and everything was just easy. And it was very, because there of so many mergers were happening, there was no really move in the organization, um, because there was all these extra employees, right? Result. And so, um, so I really saw that as not being the best path. Um, and, uh, really part away BMC went home. Um, and, and, uh, coming from a family who’s been considerably well and beyond space, I was just like, well, um, maybe I’ll spend some time and kind of hang out and maybe do some civil public service work and I’m in my hometown and maybe get involved in that way.

Demetrius: 00:16:15 And that lasted all of two weeks. And then a friend of mine called and said, hey, you should come out and do this roofing thing. And I was like, okay, I’m really, you know, the appeal was like, Hey, you’re gonna make so much money, you know, whatever, whatever. And so the first city that, uh, this roofing operation was in was in Kansas City. And so I, you know, packed up, bought a truck and moved to Kansas City, um, and, um, made about, I think I made 40 grand in three months. It was my first sort of, um, uh, sort of connection with pretax income. Whoa, okay. Like, this is what I would have made at the bank, um, you know, in an entire year. And now I have that much sitting in my bank account. Okay, maybe this is worth investigating. And so, um, that was really high ended up in the roofing business

Alan: 00:17:18 and that was, so how, how, what amount of time did you spend in the roofing business?

Demetrius: 00:17:24 Almost eight years. And so, um, you know, it was a very shortly after that I started on the sales side and then ended up on the operation side of the, um, believe it or not, the guys that I went to work for, we’re originally from Muellenberg County, Kentucky, um, which is just adjacent to Hopkins County. It’s a little town called, there’s a of people are to stand is Greenville, Kentucky. And so they were just good old boys and um, you know, we just share that connection from the outset. But I was a tax nerd and um, and so we spent the first night we met, spent the entire night at a Texas road asking independence, Missouri talking tax policy. And so that eventually blew me into accounting division, which was based in bowling green. Um, I thought I was getting this really nice, great accounting job, which is what I’d always wanted, only to find that once I got there, I was at a hundred thousand square foot warehouse, um, that had a whole bunch of shingles in it and two women as sitting in the front chain smoking once your paper files.

Demetrius: 00:18:36 And I was like, oh my God, what have I gotten myself into? It turns out that that was a $10 million a year operation. Um, that was running nationally. We eventually grew that to about a $15 million a year company. I’m open in the next two years. And, um, um, you know, that eventually caused me to be elevated to the role of VP of operations. Um, so that was 4,000 rootsy or, uh, 400 employees and uh, yeah, a lot of responsibility. But when he fixed subsidy across the country, um, and in the British Virgin Islands, it was a, it was loud. Um, eventually, um, they said, hey, you know what? We know that you want more than this. And we spun out into a, my first roofing company, um, that we eventually then later on sold back to them. Um, so yeah, it was loud.

Alan: 00:19:38 That was, so I’m looking at your linkedin that was reliant interiors was the company that you spun off.

Demetrius: 00:19:44 Yeah. It’s one that often, it’s then sold it right back to him. And so, um, and then while I was in reliant and realize only goal is to go out and win the FEMA with our contract. And so we went and did that. Soon as we did it, we sold it back to them.

Alan: 00:20:03 Oh. And that’s a nice little bit of a entrepreneur experience to get to get started without just starting from nothing. Yeah. You know, that’s a nice, uh, nice taste of, of being an entrepreneur because I’ve, the way I’ve always done it is just start with absolutely nothing and, and you know, rack up credit card debt or whatever, you know, to get things going. But, uh, you know, there’s a lot of different ways to skin that cat get things started up.

Demetrius: 00:20:33 I think there was so much for me that was so much safety and allowing them to kind of paint the picture in the early days, um, that, um, it really helped. And, and I mean still have a great relationship and still talk to them, you know, very regularly today. Um, and, uh, they were father son do all of it. I’m really kind of helped to lay the groundwork. I mean they, they introduced me to, my parents really weren’t, uh, um, how do I say they weren’t a show [inaudible] in terms of, uh, they will, um, I’d never been in an environment where people work, um, to see Ferrari’s and limb. That was kind of cool for a time and, and uh, but then you also realize, man, how much overhead that is. Um, I, you know, seeing the insurance bill for, for Ra was like, Whoa, okay. You know, this is two people’s rent.

Demetrius: 00:21:34 Yeah. Um, and so, uh, you know, those are the sort of things that I’m, the exposure just really gave, you know, gave me a real glimpse into, okay, here’s what, when you see an operational sort of scale, what it looks like, what it feels like, um, here’s the things that maybe I wouldn’t do. Um, you know, and then then secondarily to that how much character matters in success. Right? So like things that you’re, uh, you know, those character flaws that you see when you’re small really manifest themselves in and sometimes very ugly ways, um, when your big. Um, and so, you know, just being able to see all that was really, really helpful in the long run.

Alan: 00:22:22 Yeah. You know, and kind of back to your, the rich dad poor dad thing you talked about, if anybody’s ever read that, it’s, um, I read that a long time ago and yet it sounds like you in a number of ways, got to see different perspectives on business and that I think there that there are so many people I know that have this hourly mentality where, you know, I just need a job. I need to get paid by hour or a salary. And I go in and I punched the clock and, and I’m done. But people don’t, when you see the other side of how things work, you know, it can be as simple as you’re working for a company that’s, that’s you know, closely held and you can talk to the owner and just say, Hey, I’ve got an idea. Why don’t we spin off and do this?

Alan: 00:23:18 And I’m, you know, and then, and you can make a lot more money than you would make by working per hour when you, when you spin off and you build something and you sell the company. And there’s just so many ways to, to build wealth and to start companies that I think the majority of our population, the population doesn’t really get that, that, you know, it’s, um, there’s just a lot of things you can do. You just keep your eyes open and ask and just keep asking for what, you know, different things, things that you want and, and taking opportunities when they come along.

Demetrius: 00:23:53 Well, I will say that it’s getting harder, you know,

Demetrius: 00:23:59 um, as much opportunity as there is for whatever reason, at least right now it feels to me that it is getting harder to realize some of those things just for a lack of talented people, you know, whatever that might be. Um, there’s a whole host of reasons where I think it is just getting significantly more difficult to realize the opportunity, the barriers that are getting a little bit higher. Um, I think the costs are getting more significant even even in an environment where it feels like the barriers are so low in the barrier to get to scale is much higher. Right.

Alan: 00:24:41 That makes sense. Yeah. Cause if you, I, I really try to pay a lot of attention to venture capital’s since metro start. Our whole goal is to try and make it easier for startups to get really early stage investment dollars. And the general consensus out there is that more VC dollars are going to scale, uh, a smaller number of companies. I think maybe that’s what you mean of like it’s if you’re one of those companies that gets lucky and the, and the VC dollars start flying your way, like Uber or Airbnb. And next thing you know, you’re a $30 billion company or a $70 billion company and, and you’ve, you know, you’ve received $15 billion in investment dollars, but those V’s same vcs or are investing less in the early stage startups. So it’s, I’ve always found that it’s hard to get, you know, just the, the earliest dollars if you have a great idea trying to get started as is the hardest thing in my mind.

Demetrius: 00:25:45 Well, it’s really wet. Why programs like y Combinator so important? Um, you know, what we’ve seen there is like, um, I, you know, uh, just was amazing what they’ve done. Um, and I don’t know that it can’t be duplicated in truth. I mean, obviously there is only one y Combinator, but, but you know, I think here locally, um, and, and some, I’d probably shoot me for saying this. I think the healthcare play, um, and medical technologies are the wrong answer for our local community in large part because they take so much time to recover the investment, um, that it advises the investor community because they’re not dealing with tons of capital anywhere. Whereas the Roi from software related investments, SAS investments will return a faster profit, um, to the investor over the long run. So if you look at something like, um, Oh God, uh, what does the name of the, uh, the hunting startup is let’s do locally to cold wild or something?

Alan: 00:27:00 Well, yeah, I know what you’re talking about. I can’t, I can’t think of the name either.

Demetrius: 00:27:05 But, um, you know, they’re doing incredibly well. Incredibly well. Like, um, those are, um, areas of a real opportunity that I think make more sense for the investment community at large. Um, not that we don’t want to make investment, I just don’t think we have the sort of stamina yet. Fool. Were these sort of longer run medical technology devices, FDA approvals, you know? Yeah. Um, and this investment community yet. Um, but I think, and I think those people, like you, you look at somebody like Apellis when had gone outward and gotten this thing that they needed, then that should be the overall strategy. I mean, when you really should get behind you sort of software back plays, um, because they have the greatest propensity to make investors their money back quickly.

Alan: 00:27:59 I agree. Obviously. I mean that’s, that’s what I do and I’m a day job and bleed to 22 is, is all software. And I, I feel like it’s so much more leverageable than anything I’ve done before. Um, you know, it’s, it’s, it’s a hard, it’s hard to get started in, you know, you kind of have to get the ball rolling, but then you’re, you’re so much more nimble than a company that spent millions of dollars getting approval for a medical device or something like that. You’re, you’re not stuck with one thing. You can rapidly change. You’re, you know, pivot what you’re doing when you find opportunities. So I agree with you there that there’s a, there’s a lot of opportunity and you know, Steve Case’s third wave mentality really applies to us. I think, uh, looking for ideas that can, that can be looking for four business functions that can be improved with software.

Alan: 00:28:59 Um, even if it’s somebody who’s 50, 60 years old and coming, you know, they worked for ups for 30 years, but they seen a, an idea that will work, that they would love to have had access to when they were working in, in their industry, but they’ve seen this need for a long time and then they go out and start it. Uh, so I, I agree. I think there’s a lot of leverage ability and relatively low startup costs when you’re building something software related. Yeah. So how did you was, so the idea for weather check, how did you have that idea and then get started?

Demetrius: 00:29:35 It was really out of the roofing business. I mean we had some core challenges in that business as it related. Um, while in some cases we were working for insurance carriers and other cases we were working directly consumer. And so it was hard to figure out, um, in some cases who was when and to what degree. And so whether it was born out of that sort of basis, like every single year, there’s over a billion dollars and hail related losses throughout the country. And most people don’t know when that actually impacts them or when they qualify. Um, and, and that’s because if you live in a severe weather prone area, what’s the difference between one time?

Demetrius: 00:30:20 You know, you really don’t know. Um, and so we really built a solution to solve our own problem, which is we didn’t want to go to assets or properties where there wasn’t a legitimate chance that the insurance company was going to try to replace a roof. Um, and so, um, we, we really had a method internally for making that determination. And then weather check was really automating that sort of determination. Um, and so it was to look at a whole, whole lot of different data points, um, in concert with those data points and then come up with, you know, an overall thesis around whether or not we thought, um, first was a property damage. Um, and then second day, rarely would an insurance company pay. Um, because those are two different things and a very different questions. Um, what we eventually figured out was that we were really, really effective in doing that.

Demetrius: 00:31:18 Um, our first litmus test was actually, um, uh, we, uh, gosh, I can’t remember his name is escaping me, a former CEO cafe press. Um, uh, not, not Fred founder. I think it was a guy that was there before. And, um, I see his face, but I can’t think of his name, which I should always remember, but he, uh, we pitched at one of the enterprise cores enterprise for it, their pitch events they used to have, um, and he was one of the judges and it wasn’t, we lost two and they’ll 3d nail printing company, but, um, they’ll actually think is in business today. And so I’m, I’m putting that out that we’re still in business. We would’ve been two years earlier, but I think our timing worked out perfectly because we were really starting really about the same year, Hurricane Harvey and Hurricane Irma and, and Michael and Maria, you know, all of those different things were happening, which really helped us in the long run, continue to have that conversation.

Demetrius: 00:32:26 Um, but, um, you know, the CEO really said, Hey, he actually emailed me about six months after the pitch and he’s like, Hey, somebody stopped by my house and they say that I have hail damage and I really don’t have time to deal this. Can you your thing? Tell me whether or not that’s the case. And so, um, that was the first sort of real world use case of the application. And we said, no, we don’t believe that you have haled day. I mentioned, we don’t think your insurance company’s willing to pay for it. Um, and we validated that with some independent inspections. And, um, and it was really him who said, you know, or he who said, hey, I think you might have a business here. Um, you guys should start pursuing it. And so whether Jeff was really born out of that sort of first user experience, and I think that’s what’s really impactful. So when the right person says, yeah, so the right person says, okay, you know, I think you have something, then it has the ability to birth something that is much greater. So today, you know, we’re sitting at, you know, a $15 million valuation, um, you know, preparing to raise a series a and hopefully a $50 million valuation, um, you know, progressively moving forward all because of one person said, I think you have a business.

Alan: 00:33:46 Yeah. Well, fantastic. Congratulations. I didn’t realize you guys were, were at sitting at a $15 million valuation. That’s it.

Demetrius: 00:33:55 That’s wonderful to hear.

Alan: 00:33:58 Well, so, so the day one, how did you get started as a business? So we did you, had you built software for your previous company? Is that where it started?

Demetrius: 00:34:07 We had a paper scorecard. Um, we had done the math, right? So we’ve done the math to figure out what the equation was. Um, but we had really, um, I called Jermaine and I said, you know, hey, like we can’t do this fast enough. Like, you know, by the time they go get all the data and like it, you know, they’re on the phone with the person for 15 minutes is the crunching all the numbers. And so he’s like, oh, okay, well, you know, I’ll help you fall, you know? And, um, that’s really where it all kind of started. Um, eventually he was like, I got time and so you’re going to have to go find another cofounder. And so, um, we progressively looked through a series of other founders that didn’t quite work out. So that’s where we started. Um, we initially started with a focus, not on the insurance sector, but, um, the, um, really on the, a, a real community, the real estate investment trust community. And maybe I should step back a step and say, you know, what were they checked us? So ultimately, whether check measures, hail damage for insurance companies and mortgage companies, um, and property owners, right, whether you’re not your property is damaged and now we’ll move on to tell you whether or not we think it’s a valid claim. So, um, that’s, that’s it.

Alan: 00:35:39 So, so a, an insurance company, maybe, you know, if there’s a storm, then they could crank out the crank through your system and it would tell them which areas are which homes or, or properties had the most potential to have hail damage. And then they might send an adjuster out to actually look. You look

Demetrius: 00:36:03 at it, is that the way it would work? So what happens is we really give the consumer a first method for validating or invalidating their own damage. So everything that, uh, that has been offered to the insurance company up to this point, has been offered internally. Right? So like, oh, the insurance company might know that you’re impacted, but you never know. Right? Right. And so what we’ve really said is that in this sort of data driven economy that we’re in, it really should be made open source to the consumer. To the insured person. Um, so what we’ve done is we created interfaces that allow before you even file a claim for you to search your address and say, okay, well what does the web check thing damage or not? And so for the first time now that the onus is no longer on the carrier, right, it’s on you to say, okay, am I going to continue with this climb or am I not?

Demetrius: 00:37:02 Right. Um, and what that does for the carriers and that reduces the overall exposure that they have. So I believe that you don’t have a legitimate claim because we don’t see a weather event associated with your house or, um, you know, it looks like you have a roof and the likelihood that you’re going to continue with that claim just because the roof was says you’ve got hail damage is pretty low because you know, you’re not gonna find success with the carrier. The important, because now the carrier is able to save dollars, cause I don’t ever have to send anybody to your house now. Right? Like the whole sending somebody to your house just to deny your claim. Missy expensive. Um, and so that’s really how, um, how we look at it. Um, you know, there are a myriad of legitimate claims out there. Um, and then there’s a whole bunch of them that really aren’t actually legit.

Demetrius: 00:37:56 Um, you know, or that, you know, for whatever reason, you missed the, the timeline under your insurance policy, you’re supposed to do it within months or six months and you waited two years, you know, technically you’re insurance company should pay those things. Um, and so what we were trying to bring as a higher degree of continuity to that overall claims process, um, so that everybody gets what they deserve, right? Um, and, and are introverts who works for us rather than, than some cases against us or even worse than not at all. Number of people who pay for their insurance policy for 30 years, um, never use it and then decide to use it once and get denied, um, happens all too frequently. And so do you make money off of the insurance company? That, is that how, where you make your money? So where are we making our money?

Demetrius: 00:38:55 Is that we take every single policy that the insurance company writes and we monitored in real time. Right. So, um, every single physical address that they have, um, we charge them for those addresses being honored or the on an annual basis. Gotcha. And then we make money from this, but we do have some products coming out that are more direct to consumer that do start to touch the overall claims process and, um, you know, that whole thing, um, which, which in that case we would be making money on, not necessarily the claim itself, but on the transaction fees, um, in processing the payments. So then from the point of, so you, you found someone to help me with the programming and then, um, went back and forth. And finally, I guess Jermaine came back in. And then, um, how did you, how did you get to a point where you actually had some traction with customers?

Demetrius: 00:39:58 So, um, we were relatively strategic early on. We, we always thought the insurance vertical was one that we should pursue. Um, but we couldn’t get close enough to the industry. Like, you know, we needed to talk to some property and casualty actuaries and I couldn’t find any. I mean, I’m asking around town and um, believe it or not, Kentucky Farm Bureau doesn’t have actuaries in house. They have one, um, which was, um, they consult out the rest of their, their, that at that particular work. Um, you know, and then a life actuary or health actuary is completely different. It’s on another side of the actuarial profession. Uh, and so it was very, very hard to find somebody who could give us some advice, you know, what do you think? Um, and so we applied to an accelerator, I’m in Erie, Pennsylvania, and we specifically chose that accelerator because the number nine carrier in the country area insurance is headquartered in Erie, Pennsylvania.

Demetrius: 00:41:05 Oh, nice. And so what we knew was that, oh, well if we go, if we can get into this accelerator, then it’s going to put us in a position where we’re in a small town and I know small towns really well, um, and we can maybe interact with their executive team. And so we eventually got in, um, that Xcel responsive, responsible by singularity university that are corporate innovation division. And, um, it worked out really well. I mean, um, and, and that was actually run by their team out of Columbus, uh, Matt Armstead and, um, um, you know, it just worked out perfectly. We had actually met, uh, Matt, uh, several months earlier at an event in Columbus. Um, and so he’s like, yeah, I remember you guys. And so, um, we got in and got 50,000 points, um, and then progressively built a relationship with Aig. Um, and that eventually, you know, I can’t say too much more, but it was fruitful. Yeah.

Alan: 00:42:14 So that’s great. I like the strategic, the, the idea of having some faith that if you go to that accelerator in an area where there was some insurance companies that you would meet somebody that’s pretty, uh, pretty soon,

Demetrius: 00:42:27 smart thinking there. Well, I think that the principle difference between us and most other companies is that we are not at all shy about telling people what we want or what. Um, there are a lot of things that like I get asked to do that I don’t because it doesn’t actually further the goal of like building a Billion Dollar Company in Louisville. And so, um, you know, this for me is an opportunity to really kind of talk about like how we think about those things. And I get super pumped when I see some, you know, you know, 8 million bucks or 10 million bucks or $100 million because it just means that it’s going to make it that much easier for me in my next conversation we’ve got to do is figure out as founders in this community how to coalesce one another more efficiently. Um, because I’m always happy to share.

Demetrius: 00:43:24 Like I’ve been shocked at the number of people who haven’t yet asked me for a referral to y Combinator. Um, you know, you got your first waxy coming in in the state, first found her and nobody said, hey, can you refer me to why c? Which goes a long way, right? Yeah. Um, you know, uh, which I would say that that accelerate is probably worth more like a million dollars in overall value. A million plus, well, I guess it’s infinitely more than I would say maybe 10, because you’re going to raise it at $10 million cap once you’re done on. That’s where most of the companies are suggested to raise at. Um, and that doesn’t include all the free stuff that you get. Right. You know, you’re a lot of just celebrate and say, well, we’ll give you this and we’ll give you that. And all these in kind services, I found that to be no more truth than for YC. The services really are in con that really legit services that you would otherwise be paying for, um, clip. And so, um, yeah.

Alan: 00:44:36 So how do, so initially, how did you get into y Combinator? What was that process?

Demetrius: 00:44:40 We applied four times, um, actually been applying since we started. Um, and so, and this is some of the things that I think Michael Sabelle and Sam Altman and others will talk about. And even Paul Graham, we’ll talk about at length about the fact that they have an internal fear that without significant traction, um, you can’t eat into YC. So we weren’t able to get in until we had a major customer. Um, and so even though our idea really didn’t change significantly, um, there were, uh, there were some slight pivots. We’d come up with some cool hacks to get executives attention and things like that. But ultimately the core thesis around the problem that we were trying to solve, um, will sustain. And so to me, um, it, it’s a very, very legitimate concern is that the, you know, the overall, but there were certainly people who are getting into Yc, um, who had an idea, right? Um, and that is really what, how their truck, while they’ve increased their numbers so much, right, from 20 to almost 200 companies because they’re trying to solve for this problem, not being able to, uh, letting companies that, you know, or just an idea. Right.

Alan: 00:46:11 So then, so fast forward, I guess you went, went through the program that was four months out there and um, was it a pretty tough process of applying? Is it a, is it a pretty time consuming process?

Demetrius: 00:46:25 No, no, no. And you know, oddly enough, like the last time, which was the best time, um, we applied late. We didn’t apply on time. We’d miss the deadline. Jemaine and I were actually at a conference in Las Vegas, I’m going to say, oh, I missed the deadline. I had seen a text or a tweet from Michael, so bell that was like, like, oh, Michael’s the belt. He interviewed us every single time, which was even weirder. But you know, there are some companies that get it, a direct invite into, um, damn into San Francisco. And then there’s some companies that get a video interview and then an invite. So we’ve got a video interview every single time. And then we got an invite, um, the final time to the, uh, to, to come to San Francisco or a Menlo Park or mountain view, rather, um, to, uh, meet with the partners.

Demetrius: 00:47:24 And, um, it wasn’t intensive. Um, the video was simple. It was easy. It was done from my laptop. Um, and we submitted it and it was off. Um, there’s a question in that we talk about all the time that, uh, like, well, why y Combinator? And I said, you know, um, we answer, there’s a question, there’s a w why would you like it to mark Combinator? I answered it the same every single time. Who doesn’t want to go to Harvard? Like it’s like, it’s the best program in the country or in the world for that matter. Um, and we found that to be true. Um, the, the secondary piece was like the, we did a significant amount of prep for the actual in person interview. Um, so Jermaine and I had a lot of conversations about like, okay, well here’s how you answer this question.

Demetrius: 00:48:17 Um, and that’s like some of the huge benefit of having two cofounders, which was that even though Germany came in later, like my sort of thing is communication and how to talk through something. Um, his secret sauce is obviously technical wizard. Um, and, and so the ability for me to communicate well with investors, with partners, we’re tests summers, um, and then really help him through. Okay. You know, like, I know you know this technically, but here’s what it sounds like when you explain it that way. Um, and here’s how you answer questions in a way that gets people really excited about the thing that you’re talking about. Um, it even the word choice matters, you know, and so, and YC spends a lot of time talking to founders about that very thing. Uh, most of the process was heads down. I mean, like once we got into the program out in San Francisco, I mean, the first two months we spent working on product, we didn’t do much there.

Demetrius: 00:49:20 Most of my time on the road I’m working on sales. Um, and you know, then the final month was really spent on, um, the actual fundraising process. And so we were able to raise $1 million the first day. Oh Wow. And then progressively, um, raise the subsequent dollars on down the road. What about early on, kind of a backing up a little bit, the, did you get some early investors locally? Oh yeah. Oh yeah. Yeah. You know, I, um, I know he hates when I call him out, but Michael Boone, uh, Michael Senior, I’m from pioneer ventures and why aloft or they, they were, they were, um, really most important part to our early stage. Um, because they were the first check in. Yeah. Um, we had, we had followed a certain path, right? So we had one vote. Um, and then we had one, um, the nucleus grant, I’m one of final companies get into that program and which I always have to give Kudos to the U of l foundation because as bad rap as they’re getting some of the time, the program at at nucleus is one of the best in the state because what it really did is it gave us the space and the time to really pursue an idea.

Demetrius: 00:50:46 And obviously we’ve been able to add considerable value as a result, um, in a number of other companies that has that been true for as well, which are studios and, um, century health and, you know, the list goes on and off. So, um, and then, um, we won the Samsung, uh, uh, weather channel innovation or [inaudible] and you know, it just kind of progressively moved from there. And so then we had had enough sort of award based traction for them to really kind of agree it already invested once before with um, Jermaine and a previous company. Um, and so we really kind of started in on the wings of their book, of his relationship with them. And then from there it just kind of progressive Lee took off, right. Um, not without some fits and starts. We like every other startup. We, you know, we were almost broke several times and calling them, asking them to give us another page or whatever, you know, no different, um, in that way.

Demetrius: 00:51:48 But, um, they have really, um, done a great job of supporting us as we kind of went down this journey. Um, and then secondarily to that Alison way, Houston stepped up to the plate and made an investment and that works a little bit more prevalent. I think that was documented by business nurse. Um, but yeah, so, so, uh, they’ve been a huge help to us, um, and you know, continue to be, and so not until I think in KFTC came in and, uh, some of the accelerators that we went through. But um, that was about it.

Alan: 00:52:24 Nice. Well, let’s start, I don’t want to go too long and take up too much of your day, but the one, let’s maybe get a little bit of, of a advice for entrepreneurs. You know, you’ve learned, I’m sure you’ve learned some things to do and things not to do. If you are a brand new entrepreneurs starting out in Louisville, what, do you have any advice for them?

Demetrius: 00:52:46 You know, I, I tell everybody every single time to get into the community. With that being said, the community is not always right. Yeah, I agree. So I wouldn’t always take the advice of the community. And I think that some of the most people who know me know that I’m not kind of a strong personality. I don’t normally always go with the crowd, which most entrepreneurs don’t anyway. So, um, you’re, you’re with your, your trod and that way, um, I would follow the y Combinator suggestions more, um, in, so like domiciles in Delaware, um, which we did. And I’m going ahead and incorporating, um, which we did do that, but we did in the state of Kentucky, um, you know, following the YC handshake protocol in terms of garnering investment. That was one of the things that I really lacked early on. I didn’t know actually have to get money from investors.

Demetrius: 00:53:50 Um, and so today when I asked an investor for money and it’s really saying, Hey, I’m operating under the YC handshake protocol, here’s a link for you to read so that you understand how it works. If you’re agreeable to that, in which there’s not, that’s what we’re doing. If you don’t want to do that, then we’re not going to do it because it then holds the investor accountable to what you’re doing and how you’re gonna operate, which was, um, which was really, really helpful. Um, posts post YC. Um, and then really just using the instruments that are already out there, like the safe.

Demetrius: 00:54:28 So that’s all I would, I mean is that information available on the y Combinator website? Yeah, just search YC handshake. And it is really one of the best bits of information that I think I garnered cause I struggled like, um, Elizabeth and Elliot rounds of all, we’ll tell you, we’ve talked for four months, probably a year. And they kept telling me, hey, we, you know, we want to invest in you. And like I just didn’t have the, I didn’t have the infrastructure to, hey, here’s what we should do. Right. You know? Um, and I think a lot of founders are missing that. Like how do you actually get the money? Um, and so the handshake protocols are really great way, a great framework for, for moving that process along.

Alan: 00:55:12 Well, let’s say I’ve never heard of that. So I’m going to have to look into and since part of what I’m trying to do, well mostly what I’m trying to do with metro start is make, make it easier for startups to raise that early capital. And you’re exactly right. I think the thing that I hear more often from start up, uh, entrepreneurs than anything is that they just don’t even know where to start. And they don’t feel like there’s anywhere in our community to go. It makes it, it makes it easy to understand how do I actually raise capital? How do I, how do I get somebody to hand me a check and, and sign something that says that they are an investor. And,

Demetrius: 00:55:52 um, so I’ll have to read up on that and see if I can incorporate some of that. Now it’s, it’s perfect. I would say incorporate every stitch of it cause they’re right. Yeah. Matter is, is that you’re not going to have tier two capital. Here are two one capital here in Louisville. It’s just not going to happen. You’re going to have a seat angel and then you’re going to go out to the bay area or New York or South Florida, um, or Austin to get the rest of the money. The truth is, is that if, and maybe I’m recommending somewhat of a cartel here, but founders really need to value their companies in line with where they’re going, which is you’re going to have to go get bay area money, um, or you know, a larger metros money in order to make it work. Um, and so the low valuation here in Louisville doesn’t suit the investment will over the long run anyway. And so, and you can make that argument. Well, we’ve done it successfully. I know a few Skype as well.

Alan: 00:56:52 Yeah. So, um, yeah, and I definitely, I think, I agree there’s nothing wrong with getting outside money, but are we need to figure out a way, like with his handshake protocol to make it easier for local investors to help somebody just get started. Um, but had the pieces in place that make it easy for the later investors to come in, um, without any kind of concerns about the way it was set up in the first place. So that’s a really important thing that needs to be taught in our community is how to structure that very early stage investment and get people to actually make those early stage investments.

Demetrius: 00:57:34 Well, you know, I think the bit, I think the thing and say there is not a founder’s attorney in town. Yeah. I would say that there’s a lot of attorneys that represent the investment community.

Alan: 00:57:47 Okay.

Demetrius: 00:57:47 But, um, not so sure if I was going to put a can in a particular attorney who’s the founders of turn. Right. Because I think that some of the reason why the low valuations and you know, all these sort of things, I certainly get it from the investor side of the table. Um, I don’t know that it makes that much sense as it relates to the founder side of the table, um, in some of these cases, if that makes sense to you.

Alan: 00:58:16 No, I totally, it certainly does. And I’m, I’m working on that. That’s something I, that metro startups trying to do is trying to find a handful of local attorneys that really represent the startups and kind of put their heads together, you know, maybe come up with a, a safe agreement that everybody starts from that is a loyal, friendly, safe agreement. And um, things like that that make it easy for the startup to get started without having to reinvent the wheel every time.

Demetrius: 00:58:44 Well, I would, I would say that I see the YC framework works so well on it and I, I’m not being a Yc Groupie, I’m just saying that like, like we, we were able to raise $1 million because people believe in what they do and they’re ruptured that they’ve created. And so it’s really, really easy to, there’s enough social proof around that particular method of investing, I guess. I think in total, um, close to, um, in the first week close to $120 million was raised by those companies. It’s crazy. Um, and that wasn’t from institutional vcs. Some of them were institutional, but um, some of them were in private angels. A lot of them were private angels, you know, and so it seems like everybody in the bay area has a fun. Um, and so, um, yeah, I think that using that framework and letting their social proof be social proof makes the most sense in the world. Um, at this point and it’s worked for us so. So we’ll keep, keep following their direction. I were getting ready to go through the YC series a process in the next month or two. So we’ll probably have a secondary part too for you guys on like

Alan: 00:59:58 what that one? Well, I think, you know, even though, so we’ve got a little longer than I normally do on these podcasts, but I definitely think people want to hear the advice from somebody that’s been through the y Combinator program. And, um, it sounds like what you would recommend for the entrepreneur is just get involved in this startup community, but pay attention to things like y Combinator. Really look at y Combinator is process to make sure that you’re following that process versus just following and falling in line with what somebody locally tells you to do. Um, just because, you know, I think a lot of times somebody a authoritatively says this is what you need to do, and the person who’s the most authoritative ends up getting your attention and that’s what you do. And nighttime

Demetrius: 01:00:48 be right. You know? Um, yeah, my good friend Dana Cosby, who’s an attorney here in consciousness, a lot of people have the ability to be strong and wrong. Yeah, absolutely. Yeah. But, but I, I do think it’s, I think if there was a stands, I’d say you want to be locally involved, but globally relevant. Yeah. And, and that’s our sort of internal thesis. We’re here to stay, we’re not going anywhere, but everything that we do is about impacting the larger sort of national ecosystem in terms of where the area that we serve.

Alan: 01:01:25 Well, and think big too. And I really love hearing you say that you’re gonna, that you think you can be a billion dollar company. And I’ve said this before on the podcast that I’ve seen, I saw a group that I thought really had a great idea and they’re, they’re still kicking and grow and move it along. Um, but they gave a pitch at venture connectors and people laughed when they said they were going to have a $25 million valuation in five years. And I kind of looked around the room like,

Demetrius: 01:01:53 what? Like

Alan: 01:01:54 that’s, you know, to me I was kind of like 25 million, that’s all. And I think people in the room are laughing because they thought all this company, how can they be worth 25 million? But that’s, I mean, if a company stood up in front of y accommodator and said, we’re going to be worth 25 million in five years, they would be kind of like, what are you doing here?

Demetrius: 01:02:11 You know? But you see now like, you know, we have some, some more of the early stage vcs in the bay area on our cap table now people are kind of looking at us like, okay, it might’ve been true. Like, um, you know, and we’re still proving that out every single day. I’m not suggesting that we’re, we’re there by any stretch of the imagination. I’m just saying that like, like, like you need some outside ideas to your point, um, to really move the needle. So yeah.

Alan: 01:02:41 Yeah, I think you’re much better off thinking, Hey, we’re, we’re going to be a $10 billion company. And then if you end up being a $700 million company and sell it, you know, then that’s great. But if you’re start out going, you know what, hey, we’re can be, I think we can do $1 million a year worth of sales. You’re really aiming low, you know, swing for the fences and, and uh, but set, set yourself up so you can pivot and you know, you’re, you’re not spending $1 million on a super Superbowl ad or something. You’re not doing crazy stuff to try to grow. You’re just incrementally moving toward a grand plan of being $1 billion company or more. We need a lot more of those around here. That’s exactly it.

Demetrius: 01:03:22 You’re exactly right.

Alan: 01:03:23 All right. Well, anything else before we cut it off?

Demetrius: 01:03:26 I’m appreciative and that’s always a, a plan for getting married, getting to talk to somebody else.

Alan: 01:03:32 Well, I, I appreciate you being on here. Like I said, I think a lot of people are gonna want to hear what you have to say and would certainly want to have you on again, after you’ve, uh, you know, taking more steps and let us know how things are going. And I see you around a lot, so I’m sure we’ll stay in touch. Yeah, man. All right. Thanks for being on and I’ll see you soon.

Speaker 3: 01:03:52 All right. Bye.

 

Facebooktwittergoogle_plusredditpinterestlinkedinmail