A drug dealer threatened to kill him—then he grew 50x in 3 Years to $50M ARR. | Brett Carlson, Found of ServiceUp

Brett Carlson (00:00:00):
And at day eleven, we started getting death threats from the car owner. I'm going to find you and effing shoot you. And then it got more aggressive, and they found one of our phone numbers. We figure out through a little research that we have a active drug dealer's car.

Pablo Srugo (00:00:12):
And where are you, revenue wise today?

Brett Carlson (00:00:14):
I was going to defer on this one, but I'll throw it out there. We're about $4 million a month right now. And finally, the guy comes in a half hour late. And we pretty much already agreed the terms. And the guy sits down, I'm not exaggerating. He's like green in the face, he's having a hard time focusing and I go, you good? He goes, I just lost $8 billion.

Previous Guests (00:00:35):
That's product market fit. Product market fit. Product market fit. I called it the product market fit question. Product market fit. Product market fit. Product market fit. Product market fit. I mean, the name of the show is product market fit.

Pablo Srugo (00:00:47):
Do you think the product market fit show, has product market fit? Cause if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders and it lets us get better guests. thank you. By the way, if you're a fan of this show. You should definitely check out the GTM Now podcast. It's hosted by Sophie of GTM Fund, and they tell the stories, and tactics of how the top one percent of operators, founders, and investors. Build, scale, and invest. It's one of the best podcasts for founders and revenue leaders. That are trying to figure out how to grow. Just search GTM Now podcast or check the show notes. Brett, welcome to the show, man.

Brett Carlson (00:01:22):
Thanks for having me.

Pablo Srugo (00:01:23):
Dude, I look forward to hearing your story. I mean, you started ServiceUp. Which is kind of in the auto space in early 2021. Which is a pretty crazy time to start any kind of business, but especially one that isn't kind of fully online.

Brett Carlson (00:01:34):
Correct, and it actually popped out of a failed auto shop because of COVID. So in failure comes a success or at least more work.

Pablo Srugo (00:01:40):
Let's kind of dive into it. Yeah, tell me a little bit about that time, I guess, in 2019, 2020. What were you up to then? And what leads to the idea for ServiceUp?

Brett Carlson (00:01:48):
I'm a business guy through and through. Anything I've ever done, is either been with smart engineers, partnered up with smart engineers or a part of early founding teams that had a whole bunch of smart engineers, and I was sitting on the sidelines waiting for kind of the next idea. I knew I at least had one more startup in me. Because they're all consuming, seven days a week, 24/7. Sometimes you ruin your life by accident. So I'd get proposed ideas and I can always poke holes in them. Either too many people in the market, the market suck, the TAM's not big enough and then ServiceUp came along. And it was very easy for me to understand. When I started to look at it, the TAM's enormous just in the U.S. Depending on what numbers you look at. Could be $250 billion and the technology is extremely fragmented or broken. Since I'm in this space now, I try to be polite to some of my peers. But in reality, the technology sucks. So there was a massive market opportunity and I'd never, never actually seen such a large TAM that had not been transformed yet, and so we jumped in.

Pablo Srugo (00:02:38):
Who came to you with this idea?

Brett Carlson (00:02:39):
There were two original founders. One of them was an auto shop person. The other was a hotel hospitality person. Neither one of them had ever spun up a startup. I'd already done two, one worked, one failed. I'd been early on at other companies, like I was early on at Cloudera. They said, hey, what do you think? Should we do this? And I called somebody else up, who was currently in retirement and I pulled them out of retirement as the technical CTO. Because they were living down in, Puerto Rico. Thinking they were done, living like the retired drug dealer lifestyle, big comp by the water. They moved down there, because they could buy a massive compounds for $10 million instead of like Florida or California for $100 million, and the funny thing is they thought they moved down there to be done. They were thirty-five, they already spun up three companies, sold all three and, then he quickly realized he was down there with his wife and kids. And would rather work, and suffer building companies.

Pablo Srugo (00:03:27):
Yeah, the retired life a lot of times looks better than it is, or so they tell me. I mean, I have no idea. I got to work, dude. But that's what I've heard.

Brett Carlson (00:03:34):
Me too, and every once in a while. I'll take a four-day vacation and go to Mexico. On the third day, I'm like, huh, maybe I could do this for a long time and on the fourth day. I'm like, I am bored. Let's get back to work.

Pablo Srugo (00:03:44):
Exactly, yeah, a hundred percent dude and how crystallized is the idea. When these two guys, the two founders, come to you?

Brett Carlson (00:03:50):
At a high level, not much at all. I'll summarize it by this. A lot of my career has been in data. Either moving it, transforming it, storing it early on in my career. When I was really young, I'm kind of old and gray now but I was at Oracle. When Oracle was the beast.

Pablo Srugo (00:04:04):
What year is this?

Brett Carlson (00:04:05):
2000, and so I've always been around data. Either complex or easy stuff to understand, but half the time I'd explain it to somebody not in tech and they'd be like, what the hell did you just say? Like edge computing? what's edge computing? Or what's Hadoop? Or what's Open Source? And so when this one came along, I started telling people what I was doing. And I basically would say, you can repair your car on your phone, pretty simple. And everybody's like, they would think about it and like, wow, car repair really sucks. And now I can pull my phone out, hit a few clicks on the phone, have somebody get my vehicle, the vehicle goes away, I approve it on my phone, I pay for it on my phone, the vehicle comes back. And everybody's like, wow, how's that not been done before? And so we actually started in the consumer world, and then we, over time. Two years, we pivoted to B2B and then B2B2C through insurance providers.

Pablo Srugo (00:04:50):
When the founders came to you, that was the idea? It was like, use your phone and you just pay for repair, they come pick it up, do it and bring it back?

Brett Carlson (00:04:55):
Yeah, the core idea was born because somebody's shop got shut down. Instead of telling their clients that they were shut down, because of COVID. Because the rent went up too much. They just went out, they signed wholesale deals with other shops. In the general vicinity within a five mile square radius, said we're offering pickup delivery and then after about four months. They started looking at their numbers and they're like, hold on, I got no overhead, I got no assets, I got no mechanics. All I'm doing is taking money on the float, between the wholesale deal and what I'm charging my clients. And they're like, I wonder if I could put this in an app. They put it in an app, it got more efficient.

Pablo Srugo (00:05:26):
But this was just delivery? Or this was actually servicing cars?

Brett Carlson (00:05:29):
Servicing, moving and servicing. They would call up other facilities and say, hey, do you need an extra car today? There's a wholesale rates within the mechanic world, and so they would get a wholesale rate. Because they were a shop and then they started to figure out it was also a capacity model on the shop side. So a lot of mechanics would be full up. But if they had brokered twenty deals with the shops in the area. Any one of them would want a car that day and then they would just charge a consumer rate. So when we first started, our consumers were paying the going rate, the average rate and in geographic region. And then we were brokering wholesale deals. Which was anywhere between like a fifty and thirty percent discounts. To shops already in the area and they would take it. Because instead of having a mechanic sitting around with his thumb up his backside, you know, eating donuts, watching pornography on his phone. He could do some work and make some money. And the shop would not lose money, but they wouldn't necessarily make money on the transaction. So it was more of a capacity model on the shop side.

Pablo Srugo (00:06:22):
Okay, got it. That was where it was born, right? So this idea of basically taking demand and then letting other people actually do the work. And then just bringing it back to the customer.

Brett Carlson (00:06:30):
Yeah and I, quickly realized we were just going to steal everything DoorDash did. I mean, it was exactly DoorDash, just for working on cars. I mean, when we started to scale and push into new markets. We would have to go into a new market, find users, find shops. DoorDash would have to go into a new market, find restaurants that wanted to be on the platform, find people who are hungry and then hire drivers. So, we a hundred percent just stole everything DoorDash did in the early days, and then quickly also figure out all their mistakes. And started to iterate on those mistakes.

Pablo Srugo (00:06:59):
Are you also three-sided? Obviously you have the shops, you have the people and you have. Do you need drivers as well?

Brett Carlson (00:07:04):
We do need drivers, and in certain markets. We have full-time drivers and in other markets we outsource those drivers to other driver platforms. And the driver ecosystem in America is wild. I mean, it's crazy the amounts of drivers there are on different platforms. Moving things around, whether it's food, vehicles, people. I mean, the driver ecosystem is a whole other ballgame that I just never knew existed.

Pablo Srugo (00:07:26):
What's your first move? It sounds like you do some market research, you value the prom, you get your technical guy on board. Do these two founders, they stay in the business or what's their role?

Brett Carlson (00:07:35):
Oh, they stay in the business. One of them decided that they did not want to work eighteen hours a day and kind of thought. Doing a tech startup was cool and it'd be relaxing. They didn't realize it was actually harder than running a shop. So after about a year, they went and they moved to the East coast and opened up another actual physical location on the East coast. The second original co-founder runs partnerships for us. My original technical co-founder, Javier, he tried to go back into retirements. Tried to live the retired drug dealer lifestyle in Puerto Rico, but he's accidentally spun up like three other companies.

Pablo Srugo (00:08:04):
These guys come to you with the idea of you being CEO? Or they come to you as an advisor? How does that even happen?

Brett Carlson (00:08:10):
They wanted somebody who had built companies before. So the whole idea of zero to one, which I think is kind of your main premise on the pod. You know, I've gone zero to point five before, what we threw a few hundred thousand dollars into something. We built a widget. We sold it for a few million, fifteen years ago. I've gone zero to fail before. Where we couldn't get a second round of funding. When we were doing social betting, and right after Facebook went public. Everybody on earth thought social wasn't going to work. Nobody's going to make money on it. So we couldn't raise another round of funding there, and so I got the bruises, I got scars. I got success. I've watched other companies been built up and sold for billions. I've been in rooms where people have tried to acquire us. I actually was sitting in a room one time, where there's a dispute over paying $4.5 billion or $5 billion and I got invited to the meeting. And they told me to introduce myself, and shut up, and listen. So I did and I sat there, and I thought it was a hundred percent science. I just figured to be writing the stuff on the whiteboard that was indisputable and they were arguing over $500 million like it was just dust in the wind. I'm like, what?

Pablo Srugo (00:09:10):
Crazy.

Brett Carlson (00:09:10):
What the hell are they talking about? So they came to me, because I know how to build. I know what works, I know it doesn't work, I think at least and so I was kind of the guy that they knew could get a founding team around them. And actually start to raise money, and raising money for this one was pretty easy.

Pablo Srugo (00:09:25):
Was that your first step? That was the first thing? Like. once you kind of got behind it, you went on raise funds?

Brett Carlson (00:09:30):
Yeah, I raised funds immediately. We raised about $2 million in seed and I was shocked at how many people looked at the idea. Looked at the core of the founding team and said, okay, here's $100 thousand go to work.

Pablo Srugo (00:09:41):
What do you think that was? Was that? I mean, 2021 was a hype time for sure. How much of it was that? How much of it was actually just the core idea being great, the founding team being great, et cetera?

Brett Carlson (00:09:49):
I think I had a reputation for willing to work so hard that my skin would melt off my body, and my CTO co-founder had already sold three. And then the idea is just so basic, and primal. Everybody exists on their phone and there was no real way to repair your vehicle on your phone. So between the founding team having a good combination and the idea, and the TAM being enormous. Like I said, I was actually shocked with how easily we raised $1.8 in pretty big chunks, mainly $100 thousand. We had one check for $250, another for five.

Pablo Srugo (00:10:19):
But all kind of angel types, mainly?

Brett Carlson (00:10:21):
All angel types, either people who knew me well or people who know those people well. So taking money, I used to consider absurdly stressful and my father-in-law invested in ServiceUp. And I went to my wife, and I was like, hey, your dad wants to write me a $100 thousand check. And I don't think I want to take it. She goes, well, why not? I go, look, I will take anyone's $100 thousand on Earth. Because I know I will treat it properly, I will have respect for it, I will work hard. But I really don't want to hear about how I lost her dad's $100 thousand at Christmas and ten years from now. And she looks at me, she goes, well, what are you going to do when you turn it into a billion dollar platform? And he's even more pissed off. So I was like, okay, fair point. I'll take his $100 thousand.

Pablo Srugo (00:10:58):
It is a different buy, right? Because, first of all. A lot of these people, they don't have a portfolio, you know, when it comes to like angel checks. I mean, they're probably just betting on you specifically like friends and family, right? And, there is a different weight to, somebody who's a professional angel. Let's say, bets on many different startups understands not just the risk, but a setup to handle those risks. Because some will win and some will lose. Versus the ones who made a bet just on you and like, that's the only tech investment. And even if you do everything right. I mean, you've seen it before, some don't work. So.

Brett Carlson (00:11:25):
It is a totally different vibe and I've actually evolved over the years. Because I've taken angel checks for multiple, well, three different companies now. Where I was handling the checks and handling the money, and handling the fundraising. And it used to really keep me up at night. I mean, I'm talking just not be able to sleep for days. Because I was like, holy shit. I just took in all this money from all these people I know, and I've slightly evolved to where it's like, I know I'm going to be frugal and wise with the cash. I know I'm going to work my ass off. I know, I know how to operate and these people also understand there's risk. So I still take it absurdly seriously, but at the same time. I understand the dynamics a bit more. I was actually having coffee with somebody I used to work with. Used to be a CPO on one of my teams and now he is a founder. And he is starting to take checks. And he looked at me over coffee. He goes, I always knew that being the actual founder was a little different than being one of the original ten or twenty. But he goes, taking this check stuff, man. This is really stressful. I go, yeah, welcome to the big time and we just laughed.

Pablo Srugo (00:12:20):
It's totally different. I mean, being a founder CEO is completely different than, just about any other role. I mean, just the amount of weight that you carry and there's nobody to hand that stress off to. But I think to your point of taking money early. One of the things you learn is a lot of it has to do with the story you sell. I think first time you might over-index on how big this could be. I mean, you just want the round to work. So like how big this could be, how could it all work out, how it's going to be a billion dollar company. Then, you know, third time through and you've had some punches in the face. You might just be more upfront about, hey, look, this may not work. It could easily fail, a lot of starters fail. If people are still handing you money at that point, at least it lets you sleep a little easier.

Brett Carlson (00:12:55):
Yeah, when we were raising seed money for ServiceUp. I said that to every single person. I said, look, either you know me or you know my reputation. You know what Javier has done, you know the space. I am all in, but at the same time, don't give me $100,000 unless you can lose $100,000. I mean, that was my exact line to every single person. Hey, you're about to cut me a check. Do not write this if your life depends on it or you can't lose it.

Pablo Srugo (00:13:17):
A hundred percent and so once you have that. What do you do? Is it hiring people? Is it building the app? Is it testing it somehow further?

Brett Carlson (00:13:23):
We spent the majority of the money on building. So, Javier was down in Puerto Rico.

Pablo Srugo (00:13:28):
Oh, he stayed there.

Brett Carlson (00:13:30):
He stayed there. He's still there.

Pablo Srugo (00:13:31):
Okay.

Brett Carlson (00:13:32):
Like I said, he keeps trying to retire down there. But like, no joke, he still has a decent chunk of equity in ServiceUp. I still talk to him probably once a month and now he is the CEO of a turnaround, and he co-founded another company. He keeps trying to retire, but he just cannot. Which just cracks me up every time.

Pablo Srugo (00:13:50):
He's really bad at retiring, man.

Brett Carlson (00:13:53):
Yeah, his very bad at retiring. So we hired all of our original developers in Puerto Rico and so the market has changed. At the time we could give like a solid B or B plus, or A minus developer down there between like $75 and $100K. Where like in the Bay area, that same developer of at least $200, maybe $300. Somewhere else in the continental U.S. $150. So we were probably getting a fifty percent discount on developers. So our original eight, where we built like the kind of V1. They were all out of Puerto Rico.

Pablo Srugo (00:14:22):
What was the MVP that you wanted to build before you kind of went to market? How did you think about that initial launch? Or at least, I guess even part of the question is you had that other model already operating, but you were launching something new. Just help me understand kind of what things looked like then.

Brett Carlson (00:14:35):
I say this with, out of respect to my two other co-founders. Who were the first two, one and two. And then the person who built the app. But that first app was a POS man. It was, I'm a business guy and I've learned product, and dev cycles like through pain and suffering. But that first one was rough. So we had to like scrap that, build from scratch and in a lot of ways, it was more of just like a scheduling approval app. And there was a lot of human in the loop and duct tape it in the background.

Pablo Srugo (00:15:01):
So yeah, the first app let you do what exactly? The first version that you built, that you rebuilt.

Brett Carlson (00:15:05):
Yeah, so we built it so you could load your vehicle, pictures of your vehicle, schedule a time, track it to where it was, approve the repair process and then pay.

Pablo Srugo (00:15:14):
And in the meantime, are you generating demand? Are you getting shops on board? What are you doing on the sales and marketing front?

Brett Carlson (00:15:21):
So getting shops on board was relatively easy. At one point, we actually had over a hundred in the Bay Area. The effectiveness with us engaging the shops was a whole nother ballgame, but we could generally sign them up.

Pablo Srugo (00:15:32):
Because your pitch was easy. Your pitch to them was, hey, do you want more cars? When you want them, if you want them? It's like, why not?

Brett Carlson (00:15:36):
We would go out and we'd scrape about thirty-two different data points off the internet. We look at Yelp reviews. We look at Google reviews. We have some like sister, kind of quasi cousin competitors that do maybe ten percent of what we do or twenty percent of what we do. So we go scrape data off of their sites and we build an ideal shop profile. Which for us was kind of like the middle 50th percent quartile. The top end either had enough demand or had enough, maybe decent technology. The bottom end was still on pen and paper or they did shoddy work. So we'd find the 50th percent quartile and then we'd go out, and we'd drop a city launch team. This goes back to the whole model of DoorDash and we'd go out, and we'd sign up shops.

Pablo Srugo (00:16:13):
This was even in the Bay Area? Even in your first market, this is how you did it?

Brett Carlson (00:16:17):
No, in the Bay Area. We floundered and failed a whole bunch.

Pablo Srugo (00:16:20):
This is 01, right? So I'm curious in those floundering stories.

Brett Carlson (00:16:24):
I got crazy stories.

Pablo Srugo (00:16:25):
We have tens of thousands of people, who have followed the show. Are you one of those people? You want to be part of the group. You want to be a part of those tens of thousands of followers. So hit the follow button.

Brett Carlson (00:16:36):
This one has nothing to do with shops. We had a person's car, because remember, we're a consumer at first. So we were repairing this car. There was about $4,000 of work on it, and it took about an extra three days. And so if we would have been the most efficient mechanical process on earth. It would have probably taken us a full ten days. Because it was transmission and stuff like that. And we had a few parts back to order. So it took us thirteen and at day eleven we started getting death threats from the car owner. Like legit, I'm going to find you and effing shoot you. I'm going to like, and so at first we thought it was funny. And then it got more aggressive, and they found one of our phone numbers. And we're just coming out of the garage at this point. We figure out through a little research that we have a active drug dealer's car and so we finally get the work done. We have a driver, we have a full driver fleet and our Bay Area driver. He's a big dude, used to be an ex-football player. He's like 6'3", 230 pounds, like a dude you don't want to mess with. So we're like, we'll have him return the car and then the death threats were getting so, like, they looked up our address. So we're like, huh. So we go to the police station in East Palo Alto. So Palo Alto, obviously high end. East Palo Alto, a little more or less high ends, if you get my point. Go to the police station and we say, hey, we show them all the death threats. We'd like you to come with us to return the car and we're still going to try to get paid. We still want our pay.

Pablo Srugo (00:17:50):
Right.

Brett Carlson (00:17:51):
And the police officer looks at our driver and says, oh, no. That guy's done home invasions. He's been rolled up on numerous charges. He spent half his adult life in jail. We're not going to help you.

Pablo Srugo (00:18:01):
Oh, wow.

Brett Carlson (00:18:01):
Hold on, time out. Our driver calls us and he's like, the cops won't help us. I'm like, this guy is so dangerous, the cops won't help us? They're like, yeah. Yeah, the cops said we're on our own. So we basically dropped the car off around the block from his house and sent him a text that said, you don't have to pay anymore. Your car's there, sorry it took an extra four days.

Pablo Srugo (00:18:19):
Oh, wow.

Brett Carlson (00:18:19):
Oh, yeah.

Pablo Srugo (00:18:20):
How early was this? Like, into starting this business?

Brett Carlson (00:18:23):
That was within the first year. That was probably like 12 months in.

Pablo Srugo (00:18:26):
Got it.

Brett Carlson (00:18:26):
By the way, I always say that ninety percent of consumers are pretty easy to handle and then ten percent of consumers absolutely obliterate your efficiency, and nearly shut you down. Whether it's a crazy soccer mom or a drug dealer who's like threatening to kill you. Who actually probably is carrying a gun. So one of the reasons why we got out of consumers is because we are much more operationally efficient and our money is a lot cleaner just in B2B. Once we get like seventy percent automated and we're about thirty percent automated right now. We probably will go back to the consumer world, because it won't kill our operational efficiency as much.

Pablo Srugo (00:19:00):
Yeah, walk me through. I mean, we'll talk about the switch to B2B, but maybe just that first year in the Bay Area. You say shops are easy to get on, they're hard to engage. So getting this kind of two-sided. In your case, three-sided marketplace, it's all about just that kind of supply and demand matching. How do you go? How do you get consumers? How do you engage the shops? How do you make things spin in an efficient way?

Brett Carlson (00:19:18):
Early on, we were trying to do social, we were going to the big tech firms, engaging their HR departments and we still work with Apple. Both from Apple's actual fleet that the company owns, to they've asked us to continually do their consumer cars. So we went after the, kind of the big ten tech firms in the Bay Area through the HR departments. That was an early way to get a lot of transactions. Your basic SEO, which is all obviously absurdly broken and expensive these days. So one of the other reasons we got out of consumer was the CAC. The flywheel effect was like absurdly expensive to start.

Pablo Srugo (00:19:53):
And then what about the shops? Signing on the shops was easy, you said. But engaging them was not so easy.

Brett Carlson (00:19:58):
Yeah, getting them to learn the technology, not easy. We had a theme early with the mechanics and we actually printed it on hats. And it was heads under hoods, because mechanics. They get into it because they like wrenching on cars. They like being dirty. They like being greasy. They don't really want to deal with like their crazy customers. They really don't want to deal with like their computer systems. All they want to do is wrench on cars. So getting them to sign up where the whole model is, hey, we're going to bring you a car, you're going to work on the car, the car's going to go away and you're going to get paid. That model they love but some of the middle steps of, we're going to bring you a card, you got to enter some stuff onto a platform, you know, that's a little harder for them to adopt. Even though our UI and UX, is extremely clean and easy. So finding the right mechanic profile was also key in finding the right shop profile.

Pablo Srugo (00:20:44):
How did you solve that? Was it about product or was it more about ICP? Just finding the right person at those early stages. That would just go through the steps you needed to go through?

Brett Carlson (00:20:51):
Both, it was refining. Taking as many steps out of the process as possible and then leaning into maybe a mechanic that's. Let's call it under 40 instead of over 40. Who is a little more tethered to kind of device and understands the flow.

Pablo Srugo (00:21:05):
Just remind me. So you raised your seed, when in 2021?

Brett Carlson (00:21:08):
By the end of 2021. Most of our seed had been raised and then took in a little more money at the start of 2022, and then Tiger Global led our Series A. 

Pablo Srugo (00:21:17):
When was this?

Brett Carlson (00:21:18):
We closed it in June of 2022. I don't know if you remember the exact timeframe, but everything went in the toilet. In let's call it April, May of 2022.Where the entire venture world just changed all of a sudden. Where, you know, before it was like, oh, you don't really have a product, you don't really have revenue, what's your valuation? $100 million, great, here's the check. So our first time meeting our tiger partner. We met him for lunch and the junior associate came in first. And he's like, you know, so-and-so, he's dealing with some stuff at the office. And finally, the guy comes in a half hour late, and we pretty much already agreed the terms. So, signed term sheet, everything, and the guy sits down. I'm not exaggerating, he's like green in the face. He's like having a hard time focusing and me, I'm nosy. And I go, you good? Because I talked to him probably fifty times on the phone and I go, what's going on? You good? You got to go back to the office? He goes, I just lost $8 billion. I go, what? I go, did you mean a million? He goes, no, I just lost $8 billion and I'm not going to call out the investment it was in. But obviously, Tiger has gone through some transition. Where they were doing two deals a day back in like 2020. Where they were just like throwing checks out and, if you were sticky. One would stick to your chest wax and you might, oh, I got a check from Tiger here. What am I going to do with this?

Pablo Srugo (00:22:29):
100 million bucks. Oh, look at that.

Brett Carlson (00:22:30):
So everybody's like, there's zero chance your round is going to close with Tiger. Tiger is absolutely decimated. The partner that was my lead partner got canned. Because Chase called him in. He's like, hey, you know, I've lost $9 billion before but somebody has got to take the fall. You're taking the fall for this one and so, I'm convinced the only reason our round closed with Tiger is cause it was a small little check. It was a $10 million check. The total round was 12 and Tiger could find. Even today could find like $10 million on their couch. So it just kind of filtered out the back of Tiger. When everything was collapsing.

Pablo Srugo (00:23:03):
Insane, was there involvement post? You know, writing a check?

Brett Carlson (00:23:06):
Our current partner at Tiger, I love him and I truly respected, and liked the guy that also got removed. I still talk to him probably once every ninety days and by the way, here's the funny thing. He got removed for the investment that he made that lost $9 billion. In his personal funds, he doubled down on that stock. It was a publicly traded stock. Crushed it, it's probably up like ten thousand percent since then.

Pablo Srugo (00:23:29):
Oh, nice. What is it? Carvana?

Brett Carlson (00:23:31):
It was, bingo.

Pablo Srugo (00:23:33):
Look at that.

Brett Carlson (00:23:34):
That's it, there it is. Good call, you're very smart.

Pablo Srugo (00:23:36):
One of my big misses, man.

Brett Carlson (00:23:38):
I don't know if I'm allowed to say this shit, but I'm not sure I care. Tiger sold out at the bottom of Carvana. This guy went out and just stocked up in his personal life, and just made an absolute annihilating kill.

Pablo Srugo (00:23:49):
Wow, that's awesome.

Brett Carlson (00:23:51):
Yeah, it is awesome.

Pablo Srugo (00:23:52):
That's vindicating. Talk about vindicating, man. That's amazing.

Brett Carlson (00:23:54):
Tiger's very hands-off, but I enjoyed the fact that they were hands-off and frugal at the same time. They didn't micromanage where we spent five cents, but I was very aware that they were being frugal and so we had to build for three years being frugal. And that's not in my nature. I'm like a let's go to the club and throw dollar bills around kind of guy. So having to learn to be frugal was great for me and my CFO is naturally frugal. Tiger was hands-off, they were not on the board, we would give them updates, you know, after every board meeting and I'd probably talk to my lead partner at Tiger once a month, and just give them a heads up on what we were doing. And, you know, Inc. Magazine does that, like, the fastest growing five thousand in the country. Privately held companies and so we were number seventy-seven.

Pablo Srugo (00:24:34):
Nice.

Brett Carlson (00:24:34):
I think we've grown nearly like five thousand percent over the last three years. So at the same time we were being frugal, we were growing. So Tiger was happy to watch the growth.

Pablo Srugo (00:24:42):
When you raised that A, where were you at? What was revenue, for example?

Brett Carlson (00:24:46):
Don't quote me on this or don't put me in jail if I'm wrong. But I really think our revenue was about $100 thousand a month then.

Pablo Srugo (00:24:52):
Okay, would you say you had product market fit at that stage or not yet?

Brett Carlson (00:24:56):
I would say no. I would say we had concept market fit. Did we have a product that actually solved the problem? No, and I could argue that we still don't have a product that fully solves the problem.

Pablo Srugo (00:25:05):
And were you just in the Bay Area? Or what cities were you in?

Brett Carlson (00:25:08):
When we raised the A?

Pablo Srugo (00:25:09):
Yeah.

Brett Carlson (00:25:09):
We were in the Bay Area, LA, and Denver. So we were in three markets and now I think we're in like eighty-six markets.

Pablo Srugo (00:25:15):
How do you decide to launch that second and third market? What did you wait for the Bay Area to get to before we did that?

Brett Carlson (00:25:21):
We decided the Bay Area was a mildly obscure market for multiple ways, and we wanted to explore a market that had an abundance of repair facilities. There's a mechanic or a collision facility, on every street corner in LA. and so one of the things that we quickly learned was, supply and demand was also constrained around how many shops there were in a geographic region. We assumed that if there were a lot of people in geographic region, there meant a lot of vehicles, especially the West coast and so the market would be good. And what we've figured out was, there has to be a certain amount of shops. Where the shops have capacity that they want to fill. So an example is Denver, Colorado, there's not as many shops and so the wait time is always generally a week to three weeks. If you call up and you're a normal human being, or if you're a large fleet manager, and so you have to pay accordingly.

Pablo Srugo (00:26:09):
And this is just what? Inefficient market? Like there should be more shops in Denver, Colorado, and people probably should go there, and open up shops sort of thing?

Brett Carlson (00:26:14):
Correct.

Pablo Srugo (00:26:15):
Tell me about the best of the early cities. Which one was the best launch and why?

Brett Carlson (00:26:20):
In Nashville, we found a few shops that were willing to work seven days a week, twenty-four hours a day, and so that made us absurdly efficient, and they did good work. So we kept them filled up. At one point we were about seventy-five percent of their total repairs and they spun up two other facilities. So in an ideal world, we find multiple shops that are willing to go seven by twenty-four, like legitimately. Because a lot of the stuff with the last mile delivery vans. They want that stuff done in the middle of the night. So the more we can find people that are willing to wrench and grind in the middle of night, the better off we are.

Pablo Srugo (00:26:53):
Talk to me about the B2B transition. How did that happen? And what did that do to the business?

Brett Carlson (00:26:57):
So we're doing consumers, it's cruising along fine enough. There's a lot of issues in that statement and then DoorDash contacts us. And they're like, hey, will you repair our driver's cars in Phoenix and LA just as a test case. And so we're running around the office, high-fiving each other, you know, cranking out more beers and red bulls. Thinking DoorDash, like all of a sudden we're going to have access to thousands and thousands of cars without having to go out and find each individual one. So we get really excited. We launch in LA and Phoenix, and then we quickly figure out that DoorDash drivers are just not our ideal customer profile. One, they're frugal and pretty much most of them are driving cars that are a little more beat up. And so they don't really want to put money into them. And then it's also the way they make their money. So they don't want that thing to be out of service for even twelve hours.

Pablo Srugo (00:27:46):
It's all the worst things, don't want to pay, want it done fast. Like it just. 

Brett Carlson (00:27:49):
The worst entire things ever and so all of a sudden in a forty-five day period with this pilot. We launched our margins went down, our operational efficiency got annihilated, it was horrible and so once again, it's that lesson of, this is going to be great. Oh my gosh, this is horrible, but we started thinking, huh, maybe there's other businesses that we can go after and so we started exploring what businesses needed like most reliability. But also had the highest kind of price points for repairs and so we got heavy in the collision work with last mile delivery fleets, and rental car fleets. And that was the pivot. Once we started looking at the, our average repair order price with consumer was in about $800. Our average repair order price with last mile delivery fleets is about $4,000.

Pablo Srugo (00:28:36):
Wow, why is that?

Brett Carlson (00:28:37):
A lot of it was collision as simple as that. We were doing simple oil changes, filters, basic stuff. Every once in a while we get in complex mechanical. Every once in a while we'd do dent removal, but when we got into heavy collision work. Some collision jobs are $10 thousand. Others are two, but our average repair order wound up being about $4,000. Just when we started to pivot more towards collision and getting away from minor mechanical. And we still do minor mechanical and major mechanical, but the pivot to also including collision was pretty big.

Pablo Srugo (00:29:06):
Do you have both right now? Or just serve as B2B? Do you still serve as direct consumer?

Brett Carlson (00:29:11):
We just go to the consumer through insurance companies. So we have an entire insurance practice. Where we're engaged with the insurance provider and then the insurance provider, you can't do steering. So an insurance company cannot tell you where to get your car repaired. They just have to suggest and then we're one of the suggestions. They say, hey, you know, if you want your car picked up, everything will be managed, you won't have to deal with it. Use this company.

Pablo Srugo (00:29:32):
But I couldn't if I'm in one of your cities? Where you're enabled, like download the app and just ordered you for some random maintenance issue?

Brett Carlson (00:29:39):
Not anymore. Not right now.

Pablo Srugo (00:29:41):
Okay, but the plan is you want to go back to it.

Brett Carlson (00:29:42):
I'm of the belief, we're going to go out and raise maybe a C round for $250 million. We'll throw $100 million into going and conquering the consumer market.

Pablo Srugo (00:29:51):
And so tell me, your last round was a Series B, right? How much was it?

Brett Carlson (00:29:54):
$55 million. We just closed it two months ago, three months ago.

Pablo Srugo (00:29:57):
And where are you like revenue-wise today?

Brett Carlson (00:29:59):
I was going to defer on this one, but I'll throw it out there. Since I'm just talking from the cuff. We're about $4 million a month right now.

Pablo Srugo (00:30:08):
Nice, okay. So almost like, yeah, 50.

Brett Carlson (00:30:11):
Let's call it, I'll be accurate. Our biggest month so far has been three and a half. I won't exaggerate that.

Pablo Srugo (00:30:15):
Okay, there you go. Well, that's great, man. That's many tens of millions. Let me stop it there. I'll ask the last few questions that we always end on. The first one we kind of touched on it, but maybe you can expand on it. Because what I always ask guests is, when did you feel like you found true product market fit?

Brett Carlson (00:30:29):
I can answer in two ways. I don't actually feel we've fully found it yet. I feel we're still feeling our way. I always feel like we're four to five times better than anything in market right now and I feel we need to be truly ten times better for some of these large fleets to fully rip out the ugliness that they have installed over the last thirty years. So one, I don't know if we're there. Two, Amazon thinks we're there, so I'll go with that. We're pretty deep in the weeds of Amazon. I would say they're either going to turn us into a multi, multi, multi-billion dollar platform or they're going to bankrupt us on any given day. I don't know which one it is.

Pablo Srugo (00:31:00):
And actually to that question is, was there ever a time or is there ever a time. Where you actually feel everything's just going to fail? Like it's just not going to work out?

Brett Carlson (00:31:06):
Every single effing day. I'm sure you've talked to enough founders. I mean, the rollercoaster ride of doing this is no joke. It's like five times a day, I think I'm going to conquer the world and sell this thing for $50 billion in a few years. And five times a day, I think, why am I doing this? I should just go sit on the beach in Mexico.

Pablo Srugo (00:31:23):
And then last question, what would be your number one or top piece of advice that you'd give another early stage founder? That's kind of in that zero to one phase?

Brett Carlson (00:31:31):
Depends on how old they are. If they're younger and don't have, you know, kids and a partner who doesn't understand. The whole work-life balance thing is BS. Like if you're building something, there is no work-life balance and the reason why that is. Is I think you have to go through a lot of cycles and so the more, like, if you work more, you go through more cycles. Fail more, you fix more and so if you can work seven days a week, as much as possible. You're going to go through a lot of different cycles. Some are going to work, some are going to fail, you're going to get the product market fit a lot faster. So if you're younger, you don't have wife and kids. Don't fool yourself, there's anything like work-life balance.

Pablo Srugo (00:32:03):
What's your schedule like, for example? Like Monday to Friday, and then Saturday, Sunday?

Brett Carlson (00:32:07):
Well, I've gotten a little better. I get up around 04:30 or 05:00. I spend an hour praying and meditating, and reading. And I read something that simulates my brain, and I read something that's spiritual in nature. And the reason I do that is, because I've gone through periods where I haven't centered myself. And it's all about the build and the money, and the money and the build, and the build and the money. And so I center myself every day to remind myself I have other priorities. And then I launch into a, you know, let's call it a twelve-hour day. I generally try to shut it down every night for a few hours, spend time with my kids and my wife, and I work out. And then Friday night, whatever time I finish. Whether it's five o'clock or nine o'clock at night, I literally lose my phone on my computer until Sunday morning and I come back to the office on Sunday morning, and start over again.

Pablo Srugo (00:32:47):
Okay, so Saturday is really your day off.

Brett Carlson (00:32:50):
Correct, Saturday is my I do not work day. I chill, I go on a bike ride, I hang out with people. I try to forget about everything I'm doing work-wise.

Pablo Srugo (00:32:57):
Perfect, man. Well, listen, we'll stop it there, Brad. Appreciate you sharing all that with us today.

Brett Carlson (00:33:01):
Thanks for having me, Pablo. Good times.

Pablo Srugo (00:33:04):
Wow, what an episode. You're probably in awe. You're in absolute shock. You're like, that helped me so much. So guess what? Now it's your turn to help someone else. Share the episode in the WhatsApp group you have with founders. Share it on that Slack channel. Send it to your founder friends and help them out. Trust me, they will love you for it.