Kevin Gibbon – Priceless Insight on 10X Optimism (380)

SPEAKERS

Mike Malatesta, Kevin Gibbon

Mike Malatesta  00:00

Hey everyone, Mike Malatesta here and welcome back to the how that happened podcast on this podcast, I dig in deep with every guest to explore the roots of their success to discover not just how it happened, but why it matters. My mission is to find and share stories that inspire, activate and maximize the greatness in you. Today on the podcast, I’m talking to Kevin Gibbon, the co founder and CEO of air house, we talk about growing up with curiosity and a love of technology, the Uber application of everything being introduced as the next Jeff Bezos, the dramatic rise and fall of his first company, and why you should focus on solutions 10 times better. A lot of people get wrong by trying to ride the wave of AI because it’s cool or something, but they don’t really understand what exactly it is. But like try to go deep in an area try to truly understand the customer or trying to try to really build something that’s 10 times better than anything else that exists. This was a great conversation, and I hope you love it as much as I did. Hey, Kevin, welcome to the podcast.

Kevin Gibbon  01:00

Thanks so much for having me. I’ve been looking forward to this. And you heard a little bit in my intro teaser about Kevin in our conversation, but I want to tell you a little bit more about him. So you can get as excited as I am to have him on the show today. So sometimes, the misplace step offers the most profound and lasting insight. I hear you there man, by the way, innately entrepreneurial AIR HOUSE, CEO and co founder Kevin Gibbon got his start in tech, developing software for major aerospace players like Boeing and Raytheon. After a few years, he set out to carve his own path, building ship, S H yp, and attracting a lot of funding $62 million in funding, landing on fast companies 50 most innovative companies the list, and probably a whole lot of other accolades. And unfortunately, ship was a Brightstar that ultimately burned out, Kevin walked away from the experience equipped with reams of priceless insight. And now at AIR HOUSE, he’s applying that insight to revolutionize the way that direct to consumer e commerce brands scale logistics. So we’re going to be talking about not just that, but this whole entrepreneurial journey from from the lens of, of, of a two time founder, which I consider myself to be as well Kevin, although not in tech just didn’t like more boring business service businesses. It still counts, it still counts. Thank you for that. You can connect with Kevin I mean, his Twitter handle is his name Kevin Gibbon gi BB o n. That’s also where you can get him on LinkedIn, is there another place you’d like people to connect with you, Kevin? Yeah, I actually have a podcast with second time founders. So it’s, it’s, it’s called second time founders. And it’s available on Spotify and iTunes. And so you sort of search searched out as well. It’s around a few of my friends that are second time venture backed founders. And we’re just trying to demystify, what it’s like to run a venture backed company and all the ups and downs and come within to hopefully help out some first time founders. And how do you manage it? Like, you got four people as I understand it, and it has an all in type look to it? I don’t know if it’s an all in I have not listened to it yet. But I don’t know if it’s an all in type. How do you manage it? Like who’s the moderator? And how do you guys because that’s tough. When you have four P I have a tough time managing myself and you

03:39

Right, right. It’s we don’t have any external help I do one hour a week produce it. And we use Riverside and descript. And then as publish it on all the platforms. So I take one hour out of my week to do that. And also one hour of my week to record the podcast. And we do have consider our hosts, Julian has his previous company was called breather, and is next winner, and now it’s called practice, okay. And then it’s a shared responsibility between kind of the four of us we do at the same time every week. So it’s super simple. And then but we also get bring in other guests as well. So other founders that have done something, and it definitely is much different than the all in or I think that it’s from an IT, that was definitely an inspiration. This is supposed to be from a founders perspective, versus an investor’s perspective. And just talking about our journey,

Kevin Gibbon  04:40

nice second time founders podcast, check it out. Oh, and you can also his his company’s website is AIR HOUSE a.io If you want to check out what they’re doing there. So Kevin, I start every podcast with the same simple question and that is, how did it happen for you?

04:55

That’s that’s a big question. How did it happen? I think It happened with deep level of curiosity and loving technology. I think that’s kind of what has brought me to where I am now, from, as you mentioned, working for larger companies when I was just coming out of my computer science schooling, to move into the Bay Area. So I’ve been here about 10 years to starting my last company ship, which then led into unfortunately, that that was a company that did not succeed, and now coming to our house, but I think that the underlying piece that’s how I’ve got here is just love for technology, love for solving problems in very unique ways. And just a curiosity on like, what, what is possible?

Kevin Gibbon  05:52

And where did that come from? I can what uh, Can you trace the origins of? Like, what was the first technology that you love to Kevin? And then let’s explore the curiosity after that.

06:02

Yeah, I don’t, I don’t know. I don’t know. If you’re born with curiosity, I could definitely trace back to like, taking every single gift or remote control part and understanding how it worked and rebuilding them back to building my first websites online and geo cities or whatever, and then building them for other people. I just, I just really loved just the building aspect of things. And I also do on on the side, I consider myself like, not so much anymore, but like I’ve taken apart and rebuild cars and, and stuff around the house. And so build things from nothing. And I don’t know, I’m not sure exactly where that that kind of like builder mentality comes from. But it definitely has always been with me, as long as I can remember.

Kevin Gibbon  06:58

So you’re a software and a hardware person. Yeah, kind

07:01

of haven’t built any, any consumer electronics. But yeah, if you count building cars, as one of them Yeah, definitely. Definitely a builder

Kevin Gibbon  07:13

what, what kind of cars do you like, what what kind of cars were you? Were you building or rebuilding?

07:18

So at the time, I was actually into, like, four by four trucks. So and big lift kits, and that that kind of stuff? Yeah, four wheel drive and, and all that, that went into that and swapping engines out and transmissions and axles and all that kind of stuff. And it was just, I think probably what drew me in was just I, where I grew up that was just kind of like the hobby that a lot of people did. And I kind of just like, but what I really loved about that was like the building aspect of it. It’s like you could just very curious on like, doing something myself and always like building something and where where was it that you grew up, Kevin? So I grew up in a suburb outside of Vancouver, Canada,

Kevin Gibbon  08:06

okay, and any racing

08:08

those trucks you know, racing, but definitely something that I’m interested in doing now.

Kevin Gibbon  08:13

Oh, what do you want to race? Same type of thing or something different?

08:16

I I honestly don’t know. Right now. I don’t have a lot of sight. I have two small kids and running a company so I don’t have a lot of spare time. But I’d love to love to get into truck racing one day would would be a cool hobby.

Kevin Gibbon  08:31

Have you done like the racing schools like Skip Barber or something like that?

08:35

No. Yeah, no, definitely. I’d love to do that.

Kevin Gibbon  08:38

So much fun. I’ve done that a couple of times so much fun. Gives you It definitely gives you an appreciation for what it’s like to be a fake racer. And how hard that is. Compared to what you actually see. Right? I’ll faster.

08:52

Right? Yeah. On TV doesn’t look the same. This is I’m sure it is in person.

Kevin Gibbon  08:57

No rips your face off in person when they when they do. On TV. It looks like they’re going to kind of hit each other and stand out for like a mile. Yeah, yeah. I do. So on the Curiosity thing you said, you don’t know if you’re born with it. I see it feels to me. And I’d love to get your impression on this. It feels to me like everybody’s born with curiosity, and then life and people and rules and whatever start to sort of chip away at it. Yeah. And it becomes something very difficult and unusual to maintain. Although, I think if you ask most humans, they would say yes, I’m curious, but I’d like to get your perspective on that.

09:41

I think yeah, I think everybody has a certain level of curiosity, curiosity built into them. I think that I definitely would, would skew more towards like the very curious and just like really, even to this day, like I hear about a company like great example would be like chat GPT today, right like I’m just like, not, not in my industry. I know nothing about AI or anything that’s been going on. But just like, I just, I didn’t want to just learn about that the What is this new technology? How can it improve whatever? How does it work? And it’s just kind of like built into me. And I, yeah, I don’t know, I just I just really love learning things. And it just just doesn’t. I can’t stop myself from like going down rabbit holes and into other areas that I may not be like my core interest area.

Kevin Gibbon  10:35

Yeah, I was just prompting chat TPT this morning on a couple of things that are so cool about. So I so your curiosity, do you find it to be like when you’re around people that you don’t consider to be or you don’t feel like they’re as curious as you Does that bother you? Or does it reinforce or strengthen you?

10:53

No, no, I think I think everybody has their strengths. And I think like, Yeah, I’m have deep relationships with people that are are not as curious. And and they’re, they’re kind of doing their own thing. And they’ve been doing the same thing for 10 years. And, and that’s fine. And we have common interests outside of that. But yeah, definitely, like I could see like when other friends that are more curious. And like they go to go into deeper things like I enjoy the conversations that we can have around just like new technologies or new way of doing things or just anything new. I really, I really enjoy just learning a lot.

Mike Malatesta  11:38

Got it. And when you went to college for computer science, I think, right? Yeah, that’s right. Was it? What were you did you know, or what did you think your path might be?

11:50

So before I went to college, I wanted to work in the gaming industry. And that was the that was kind of I loved video games. And I was very curious on how they’re built. And then I went to college, and I just kind of fell in love with like the art of programming and how you can solve things in a very scalable way. And I took my first job right out of college, I think that was for Raytheon was a defense contractor. And just, it’s definitely now being in the startup world, I definitely wish I would have went startup world faster. But it was a very interesting company and seeing that the stuff that I was able to code would go into production, and there’ll be actual users. And that was really exciting for me. And then that kind of progressed to other larger, I’d say that early on my career, I definitely could not have predicted that I’d be starting my own like companies and scaling them and moving to down to San Francisco and doing all those things. But it was kind of a progression of just like being more interested. And when I actually started my first company, it wasn’t it was actually before ship. It wasn’t Vancouver, in that was just probably out of frustration of working for larger companies. And it was just like, at the time, like TechCrunch Disrupt was a big thing. And I was always an avid watcher and I was just like, you know, we could we could like, like, convince one of my colleagues to quit his job. And we got some friends and family money together. And we’re like, we could build something, we didn’t know what the hell we were doing. And this was before the days that YC was that big and everything like that. And it was just like, it was freeing. And we also we got hundreds of 1000s of users on our first initial project. And like, that is like just as hit a dopamine that you get is just like, wow, like, some code that like two people wrote, can impact so many people. And I think that’s where it changed from just being like, more or less like a relatively good paying job to like, an obsession into like, the startup world.

Kevin Gibbon  14:21

Yeah, it’s like, I mean, you’re basically improving and or changing people’s lives as a result of what you’re doing. It’s it’s kind of there’s a lot of things that can do that. But it’s hard to think about that when you’re in the middle of doing it sometimes, right? It’s like, right, yeah. So this first startup that so your, your your your podcast is isn’t named correctly, you’re actually third.

14:43

Well, no, everybody’s the third and I don’t count my first company is a real company. It was just the two of us. We didn’t really get that far. But and we we took just some friends and family money so I wouldn’t, I wouldn’t consider If it was a venture backed,

Kevin Gibbon  15:01

yeah, okay, everybody. Yeah. So I was at recently I was at a conference in California called Abundance 360. Are you familiar with it? No. Do you know the name Peter Diamandis? I do not. Okay. Well, anyway, it’s a it’s a conference that focuses on abundance and abundance in artificial intelligence, robotics, health, food, you know, everything. And one of the speakers, speaking of programming and chat, GPT was the founder of stable diffusion stability.ai. My mistake, I think, is how you say his name. Do you know him, by the way? Okay. Anyway, he said, this was a pretty bold statement, he said that, in five years, AI will be doing all of the all computer programming, there will be no more programmers. And as if someone as a programmer, so started out in that, I just want to get your sense about that. Do you think that what do you think about that statement?

16:02

I think it’s false.

Kevin Gibbon  16:04

I do too. I don’t why do you think it’s false?

16:08

I think that there’s, there’s all So for one, there is a lot of legacy programs out there that that even if something amazing, like GitHub co pilots, crud example, able to autocomplete a lot of code, which I would say is probably one of the leaders and in like AI code completion today, you’re still gonna have a lot of legacy systems like that, like even even today, actually, and I’ll bring this back into air house, like, we work with a lot of partners that are, you know, like, our probably our worst systems that we had to deal with is like, dropping like a flat file, if anybody knows that is into an FTP server. So like, I think the legacy stuff is, is going to be there for for many decades. There’s still I think that I don’t know what percentage of of computers that people use that are still on Windows 95. But I think that that is going to take many decades. And I think that even if you’re thinking about starting a start up from nothing, and thinking about having no no code at all, I don’t, I think that definitely will be the case for certain verticals, just like it is the case today, right, like, so some of our customers, there are brands that use Shopify, they don’t know how to code, they don’t know how to create an E commerce site. But there’s a SaaS solution that basically like we replaced the need for you to have an engineer to sell things online. So I think that the definitely, there will be more places that it will help, I think it’s going to, it’s going to, like supercharge the programmer, but you’re still just like us chat GPT today, like, there’s, I see I have those funny and like you see these, like prompt engineers, for different companies, it’s like, you still need to know what to enter into the thing to get the actual output out out of there. And so I don’t see even even like starting a brand new startup unless it’s very, very simple. I don’t see the the that it’s going to take over programming, and I think in five years is is way too early. And also, I look at like older industries as well. Like, I’m no expert in this industry, but like farming, for example, like think of all the automation that’s happened there, you and I’m not even going to try to touch as far as like that. The automated machines or all that, that but like you still have farmers, and they still own land, and they still run the machines, and then you have to do maintenance, and they have to do all these things. Like I think that this person who probably said that is is trying to make a bold statement because it we’re talking about it right now. Right? Like yeah, the bold statements, they get covered Balaji who who has another very bold statement that that Bitcoin is going to go to a million dollars in 90 days. And I think that that’s not true. But and also, but it’s a good way to kind of like get your name out there and like and and start having people having discussions about a lot of these things, which I think is important, I think I think that with programming what is gonna happen, it’s going to be slow. And but it is going to really just like the other things in computing, just like how like aw US changed the nature of like, you don’t have to have your own datacenter. Like, if like before, to run any size of company, like you had to have your own datacenter. And it would cost you like at that time, you’d have, you’d have to raise millions of dollars just to get this the server’s up and running. And now you don’t you have AWS, you have GCP, you have a lot of other outsourced solutions. So I think it’s going to be the same sort of thing in the programming world, that AI is going to give more leverage to people. And the same, the same thing that like airtable has done. I don’t know if you’re familiar with this company, but like No, they’ve they there, they connect a lot of different data sources, or retool is another great example. So they allow you to be basically ingest your database and for non developers or developers to create faster components that like internal teams can use. So I think that that’s going to happen. I don’t know what the interface is going to be, it’s definitely not going to be a voice interface. I don’t think I think the voice interface like for jet chat, GBT I, I’m not a huge fan of the, of the current interface, just just even comparing it to, like Siri. And like, the voice inner interaction is you just, it’s very blurry. And in charge epgd has, is very impressive as a novelty. But to actually get like, I’ve seen examples of like, oh, build the settings page and allow my users to do XY and Z, you’re not going to continue, I don’t believe that there’s going to be a world that people are actually going to be like building interfaces off of that, I think it’s going to be much more like, oh, there’s gonna be an interface that you’re gonna be using a computer for, and it’s just gonna give you more leverage. I’m not I’m not a big fan of the chat interface as, as something that is going to scale just the same way that if you remember, the, the bot craze was like the massive craze, everybody, you can interact with all these bots, Facebook had all these bots. And then it turned out to be like, it’s not a better interface than just like pointing and clicking and actually getting the exact thing that you wanted, but I think there’s gonna give a lot of AI in general will give a lot of leverage to programmers.

Kevin Gibbon  22:42

Yeah, I think I I’m on board with you on the leverage part. So it’s gonna, to me, it’s like a giant optimizer, like who? Who’s gonna figure out how to optimize it, to help them not replace them. Right? And like, right now, it’s like a great get me started thing. That’s what I like about it, you know, you started in a pretty good way. And then you’re like, oh, okay, that would have taken me a lot of time to get started. Now I can Exactly, yeah. tivity to finish it well,

23:07

and also, like, you look at like, I think there’s like two to 3 million open programming jobs right now. Like, that’s great. That means that there’s going to be more companies started, there’s going to be more products out in the world. We’re on the shortage for programmers, especially the highly skilled ones. So I think anything that could give us more leverage is a good thing.

Kevin Gibbon  23:30

Yeah. And that’s a good example you use with the farming because it was kind of like, yeah, up until 1850. Farming was the same as it was in like, yeah, 1000 BC, but then, right. But then, you know, factories started, and they needed people to work there. So they came from the farms. And so the farmers had less people. So what do you do? Right? You got to you got to fix thought of it. You got to automate the farm. And then And then now, it’s like, farming has to be so automated and so precise, because nobody wants to, you know, not a lot of people want to farm anymore. So it’s like you have to, but interesting, it was an interesting example, because food output has gone up tremendously with a lot less farmers. Right,

24:12

right. Exactly. Yeah, yeah. Yeah, that’s the exact same thing is gonna happen here.

Kevin Gibbon  24:17

Okay, well, thanks for indulging me in that. Yeah, little little rabbit hole. Okay, so you’re working for these big companies you’re in what happens to bring ship the ship idea to life and and an accompany to life?

24:31

So I think so. This was in the air as 2014 And I think this was in the air of the Uber for everything. So Uber and Lyft. Were a couple years old by then, and then the Uber furcation of all of these industries was happening. It happened in dry cleaning. Obviously it happened in food, which has been very six Last fall, that happened in a lot of unsuccessful categories. So storage is one of them on demand storage is not a thing that people want. And I knew something about the shipping industry based on when I was earlier in my teens, I was an eBay power seller. And I just knew how like terrible it was to sell things online. And I was just like, looking for a better solution for that I was at the time and in Canada, you actually like you couldn’t even get pickups from like, your the Canada Post. And I was just like, Couldn’t there be a better way? Couldn’t there be like a magical, like, take a picture of whatever you want to ship something entering where you want it to go, and somebody will just magically pick it up. And so it was really inspired by the Uber. Uber isation of everything class my knowledge of like, how terrible shipping things were for like a small business.

Kevin Gibbon  26:02

And that when you were just saying that it reminded me of the current Amazon drone commercials in these right where the guy like it’s almost like he wishes for something and all sudden this drone comes over and drops it in his lap. Yeah, like two minutes later. So okay, came out of being an eBay power seller and struggling with like, how do you ship stuff? How do you get it? How do you receive it? How do you get it back? So what do you put together? Like, how did you put a team together? What how’d you get it off the ground?

26:31

It was myself and my co founder. And we just built it ourselves. And we did the pickups ourselves. And we shipped off the thing. We we put labels and boxes and we dropped it off at USPS. And that was how we got our first few customers.

Kevin Gibbon  26:48

Okay, so it was like but an app that how did people engage you, Kevin and wedc? How did you get stuff? And yeah, I mean, that sounds very, like a very manual thing to probably Yeah, yeah. Yeah. What explain

27:02

the initial version was a web based app, how we got customers, we’re basically advertising on Facebook, I think we advertise ourselves as the Uber for shipping. And that’s like, if you have something that you want to ship out like that pain point really resonates with you, because you don’t want to box something up, you don’t want to wait in line at the post office and do all those things. And so we were able to get our first customers there. And then we did the everything outside of that. So the packaging, and then we would literally just drive the boxes, the pack boxes to USPS. And then everything was kind of housed inside of our, our ship application. So we’d send back tracking information to the customer and be charged them and all those things.

Kevin Gibbon  27:58

So these were people, not businesses that had something. They had something they wanted to ship. Yep, they interfaced with you, you went and got it. You took it somewhere you package it, and then you took it to the place where they could ship it post office or whatever. Yeah,

28:13

yeah. So we just basically did the task that they would have had to do themselves.

Mike Malatesta  28:17

Okay. And then it must have worked, because as I mentioned, you ended up attracting? Yeah, a lot of funding. Big valuation. Yeah. How did you scale that thing. So

28:29

after that, we we raised a seed round of investing, to hire more engineers. We, we rented out a warehouse, and we hired people in the warehouse, we also hired people to pick up the items. And then we just built the application from there. And then we raised as we got it was, we got a lot of press, and I think for us was like our main driver to get more customers and also more venture capitalist and, and more employees and all that it really was a magical experience, because it was taking something that you would have to like print off a printed label, which people don’t have printers, and wait in line at the post office to like, it turned into an app where it’s basically like literally like take a picture of whatever you want to share. Like we’ll come and pick a bike up from you. And we’ll take it back to our warehouse will professionally package it. And then we’ll get it in the hands of whichever carriers are also cheapest as well. And then we will share all the tracking information. And it seems just like a really closed loop transaction and people really they loved it and

Kevin Gibbon  29:48

what was the value prop was convenient to them or what yeah,

29:51

totally, it was convenient. It was in instead of you having to go and ship things it was I think there was there was a Definitely a novelty aspect of it as well. It was like, how how bad it was to wait in line at the post office, which you can compare that to like a DMV visit sometimes Yeah. And then it’s just like, magically take a picture entering where it’s going. And we would just come up show show up, we launched with on demand, so we would actually be there in 20 minutes. And it was just something that just like, blew people’s minds away, right.

Kevin Gibbon  30:31

And so it’s kind of like flywheel effect, then that, you know, people just started talking about it. And I know, you said you were advertising on Facebook, but like, where did you get to the point where you’re like, holy crap, we got, we got stuff coming out of our years here. What do we do? Like you said, you got a warehouse. But it’s, it’s I don’t know, I’m just trying to think of how you like the pickup part of it and taking it to the post office. There’s a lot of moving parts in there. Plus, you’re meeting people, like, oh, that person’s not here. They said, they’re gonna be here. For me to pick up the bike or whatever.

31:02

Yeah, it was, yeah, it was, it was a really, operationally challenging business that we, we hired people for specific roles, and they had to handle that part of the business. And we would have, if things went wrong, we would have accepted except exception handling. And we would figure out a way to improve the process over time. And I think that one important thing with people hopefully listening like, at, it seems like at scale, it’s just like this, like, monstrous thing, like, how can you get all these things to work together, but it starts off very simple. And it’s just like, just like programming, right? Like, you write your first function, then you write more functions than everything. And that is the same thing with building a company. It’s, it’s, you get people, you hire people to take on this responsibility. And then it just kind of scales from there, then you hire more people, you get a bigger warehouse, you start then going to two different cities, you start launching them, you get more capital from venture capitalists, so you could hire more people. And that’s kind of, but it’s it from its most basic part, it was like things, they you gotta be scrappy the early days, but like a lot of these things that they do seem like insurmountable. Like, if I would have seen the operation, I wouldn’t believe the operation that we were, we were able to build, like, early on, but especially me being like a first time like venture backed entrepreneur, I was just like, kind of blind to like, all the challenges. And that’s kind of like being naive a lot of the times is kind of a benefit. Yeah, it’s an advantage. It’s like, you don’t know what the problems you’re gonna, you’re gonna solve. And then problems come and you gotta solve them. And, but, but if probably if you were a FedEx or UPS, you’d be like, there’s no way this is gonna work. Like there’s no way we can’t change our or the way that we route things. We can’t package stuff for people. But thinking from the ground up, you definitely can I think that’s a huge advantage of a startup. And it’s

Kevin Gibbon  33:19

kind of like the big, you know, UPS, FedEx others, you have to do it their way. And your approach was we’re gonna do it the way you want. Yeah, it sounded like, right. That’s and there’s always there’s always an opportunity there. The question is, you know, is it a sustainable opportunity? Like, how do I? How do I get to the point where I eventually have to start doing it like everybody else? Because I learned that that’s how you actually do it efficiently or, you know, in a way that makes money or whatever? And was that what you encountered? Or was?

33:47

I think that so ultimately, yeah, ship ship did not work out? I don’t think that I think a version of ship definitely could work. I think that it, it probably should be bootstrapped. And it should be grown slowly. But I think that UPS and FedEx and use any large company as an example, like they, they they did the best thing that they when they started that that didn’t exist before. And there’s always going to be different companies to solve. So a problem better, like this is just the nature of business you have incumbents get disrupted by startups all the time. Or maybe they’re an additive, and they’re a partner. And that’s what in the case with us a ship. But I think that we were just able to look at and also I think I think like consumers or businesses like their needs change as well. Like, if you think back to like the software people were using in like the 2000s. Like they for business software, like they expect a lot more now. And so like you have an opportunity to build better things for them now. And they’ll they’ll migrate from their third maybe their older school software solution. you’re on to something newer that fits better with all the tools. I think that that there’s always things that are changing, and the technology and what people expect in and looking at other companies like, like open AI, what are they doing? Like, I think there’s going to be a whole breed of other companies that are going to try to, to kind of catch that wave, right. And things are always changing. And so I think that you, as an entrepreneur, have to like talk to customers understand their pain points, and then build something, I’m a big believer in building something 10 times better than what what their existing solution was. And I definitely know that that was the case for ship, it was 10 times at least 10 times better. However the company did not work out is because from a venture scale, like what what venture when you get into venture, you’re you’re looking for the venture capitalists like It’s like rocket fuel that they want, they’re betting that your company is going to be massive, it’s going to be a category leader, 100x category leading company, it’s going to disrupt the incumbents, all that need to know that going in. And unfortunately, for us, we found a really good fit with ship for on the consumer side. But consumers just don’t ship a lot of stuff. So where FedEx and UPS they had to consumers, but also like what drives the majority of their business ecommerce, right. And so we did not serve that that market really well, which actually, I don’t know, if you want to pivot into what we’re building now. But that’s what kind of came out of ship into what we’re building now their house.

Kevin Gibbon  36:45

So I do want to pivot there. But I have two questions for you before we please go there. So help me help me get into your head, you start this company, and a few years later, you’ve got 50 $60 million in funding, you know, and it’s an asset of value that, let’s say, maybe it’s a quarter billion dollars, right? And you’re in you and you and your founder looking at yourselves and you’re thinking, What are you thinking, wow, are we this is so amazing, or you’re thinking holy? What have we got ourselves into? Like? Well, not many people that are listening to this, including me can put myself in a situation where someone’s given me 50 million plus dollars to build out a business. And you know, on paper, I’m worth a lot of money as a result of that. How are you feeling about that

37:31

I was feeling on top of the world. I thought that ship was going to become the next Uber. I thought and also we had like the legendary investor, John Doerr was on our board. So he was one of the first investors in Google and Amazon and a lot of other ones. He’s a billionaire many times over to introduce me as like the next Jeff Bezos. And so that was definitely like my first. I hadn’t, I hadn’t really failed that that much up until that point. So like, my ego was there, I thought that we weren’t going to do that I thought that we were unstoppable. We were spending money at a rate that was ridiculous based on where our revenue was. But that was like, I think a mistake of like, a first time venture entrepreneur, we saw our growth rates slow down and our spending, we didn’t actually we did do some layoffs. But we didn’t do them fast enough. And we tried to solve a lot of our problems with money. So we hired more senior executives to try to figure out what the problem is, like, why are we growing? It’s like, no, there’s actually not a market, the markets not big enough. Like, it’s just really not. And there was a lot of learnings in that. That it was ultimately we, we pivoted late into, I think we probably have like $5 million left in the bank. And we pivoted to towards serving more of the brands versus the consumers. But it was just too little too late. And there was a lot of history in the company. And we had a really big board at that time. And it’s just really tough. I think that and that’s why I tell like entrepreneurs, and this is one of the reasons that I wanted to start the podcast that I have now, like your advantage over other larger companies is like your ability to be nimble and be creative. And you can do that, that when you’re smaller when you’re bigger. And it’s like you’re steering a cruise ship versus like a very nimble small boat. And that’s that is a massive advantage for startups over incumbents. And unfortunately, we thought that we were going to be the next Uber and we built out the team accordingly. And we had people that were not able to really take the big risk Send all of that. And I was also I still believe, like we also had, I would say we had amazing product fit. But we didn’t have product market fit. And what I, what I mean from that is that we weren’t able to grow our users in a way, that profitably made sense. And so we didn’t have that pull from the market, it was very much like after we saturated a new market with consumers that loved our product, it was basically like flatline growth. And then it’s just like, what do you do from there, and we tried a bunch of things. And we tried to improve the product a little bit here or there. But we had like a systemic issue, which was, the market isn’t that big for the service that we’re offering, even though that the people who use used it really loved it.

Kevin Gibbon  40:52

It’s funny, as you were talking, I was thinking, when you’re talking about being nimble, I feel like there’s a lot of strength and having little resources that promote being nimble, and it’s easy to convince yourself that if only I had more money, I could even be more nimble, right, I can even be more nimble. Yeah,

41:10

the wrong way. Look at

Kevin Gibbon  41:11

right, because, yeah, the money comes with, like, you know, that that’s saying, like, you gotta burn the ships. Have you heard that saying, so? With money, you never burn the ship? Like, right, right. So, so, Kevin, you go from being, as you mentioned, like, on top of the world, you know, you got all this money, and then you figure out Product Market Fit doesn’t work. You try all these things? And and ultimately, yeah, ship doesn’t work. And so on top of the world, how, how are you feeling when when ship when it becomes evident that ships not going to work? And then well, that’s first and then second? How do you like how did you stay confident enough to then, you know, start at your house, I mean, what was life like for you then.

41:52

So at the end of the ship, we were pivoting into now what is a version of air house, and it was actually working. So my confidence actually didn’t dip. So while while we had to, like formally shut down, shut up, it kind of turned into air hose from all of our learnings. And so it honestly, it was me running on a lot of adrenaline at the time, like, I also was not in a financial position to not have job didn’t want to work for a large company again. And so I basically the day that it was no longer affiliated with ship is when we my co founder, Sarah, we started arrows and we were able to raise some, some seed capital and continue the journey. But in a much different way that we had was shipped with was shipped, we had a lot of overhead, a lot of CapEx and warehouses and physical infrastructure and everything like that. And we kind of turned that into what are their house, which we saw, our biggest customers were actually these, they were a small ecommerce brands, and they were looking for our credit, different solution. So they wanted somebody to store their items. And then when they actually, they sold to actually ship them. And that is an existing industry. It’s called the three PL industry warehousing industry. And so I knew that that’s what people wanted a modern version of that, and also quality operations, which was a really big problem in the industry. And it still is today. And so it was really, that transition was like there was no break. And my optimism, it really didn’t decrease because I was now I was confident that I could build a company like at a at a big scale. And I knew that we just we just had the wrong target customer and the to build like a venture scale business. And I was very confident in like, just all the learnings and like also, like if you’re taking venture capital and you’re having to scale warehouses, that’s not a good use of venture capital, like venture capital, they say the hockey stick growth right? Like your your growth needs to scale exponentially. You cannot scale warehouses exponentially and keep the same quality. And so that was a really big learning for me at ship as far as okay, I don’t want to ruin customer not not not not big enough market, we know that we build a really good product, but that still doesn’t really matter. Because there’s not enough people that are going to use that fruit more frequently enough warehouses are definitely not something that you want to take venture capital money and scale it because you’re gonna get to a point where it’s just too much to manage. I’m a believer in like, venture capital should be used for or technology much primarily scales, bit scale a lot, a lot faster than atoms. And so that kind of led us into what we’re doing an air hose, which is we take the partnership approach. So we don’t actually own the warehouses. We work with digital first brands, and we provide them fulfillment solutions. So we’ll partner with three PL, and we have many in our network, I think we have about 50 different warehouses across the globe, today that we partner with, will be able to help you as a brand, get your your inventory inside one of those warehouses. And then we’re the software that kind of links everything together. So you could be using five or six different locations, you could be using domestic or one of our international locations, and then we kind of just take care of all the complexity of partnering with them. And also figuring out who the best three peels are, which is a really hard thing to do. But we we know that because we actually have customers using that. And so it was all go back to your question. It just kind of like naturally flowed into this, but I’m not gonna sit here and lie that there was not I think, I think probably like, like, probably a year or two and arrows is where when, when things actually were starting to work. That’s a lot of like, the things the trauma that I went through at ship and like, you know, on top of the world to like being nothing, it kind of like hit me. But I think, yeah, and like, mental health wise was was was not great. And but I think the journey to kind of move towards Barrelhouse was just, I got to do this, like I’m running on adrenaline, and all these things that I’m like, I know if, like everything I know if we could build an asset free way that these brands can ship their stuff. And not only own the actual warehouses, like this is a really like not only big business opportunity, but also like this is going to really help and change our customers like lives because they’re spending so much of their times figuring out who they should work with. They have bad three PL cells, they’re having manage them all this is like very similar to what Amazon did for AWS before that, you had to actually like rent out computers and different servers and provision them and everything. And so I like to use that analogy into what we’re building now. At our house.

Kevin Gibbon  47:38

Well, you you the way you just described that was definitely a like textbook example of the delusion that an entrepreneur needs in order to keep moving forward because a person without the delusion would have would it that stuff would have caught up to them. Right when it happened. Right. And you just kept moving. I’m wondering, Sarah was not your co founder and ship. Is that correct? Oh, gosh. She

48:01

worked for me at Shep. Okay. Yeah.

Kevin Gibbon  48:04

How critical was she to, you know, helping you maintain the confidence, the delusional optimism, all the things that you needed to get our house off the ground and keep it moving. So critical.

48:15

It was us, it was it was us. And we she was running sales and marketing for a product that we hadn’t publicly launched at ship, which is definitely a different version that we now built at our house. But we’re like, we both see this need. It’s like brands are like, are clamoring for the solution to something so like we we have somebody in here. And like we don’t want to stop like we want to continue on. And I’m also a really big believer in as an entrepreneur, especially a venture backed entrepreneur, there’s so many things that like that you need to there’s so many problems and different hurdles that you’re going to have to get over. And so you should try to make as many things as easier as as you possibly can. One of them for me was moving down to the Bay Area. And like being around people that are like minded financing was definitely a lot easier. That was something that I made its decision with ship to move away from Vancouver. Another one was was with warehouses, like we could have started another company in a different area. But like we knew and also like Logistics is not my I wouldn’t say like I love like logistics itself. But we just have so much knowledge of this, of this area in this problem. But what I do love is solving customers problems. And so I tell every entrepreneur that I can, like try to put yourself in the best position and make those hard calls. I still do recommend people moving to the Bay Area I think There’s like an infectiousness of just like really talented people and other entrepreneurs that you can either go and, and get coffee with. And they’re super open, and we’ll help you and all those things. But also, if you’ve been in an industry for five years, and you had no some secrets about it, like, you should probably go and go down that that path, even though that may be painful, and I know other people that have been in other areas, where they’re just like, No, I want to start fresh, I just want to like remove, like, get out of this industry. But my approach was like, yeah, it there’s some scar tissue there for sure. But like, we know better than most other people. And so we have a leg up on the competition,

Kevin Gibbon  50:45

you learned what didn’t work, you learned the portions that did work, you had an idea of how to, you know, leverage the portions that did work, while you were leveraging very smart warehouse space that other people bought and paid for. And were looking for customers. Right. So it was, I think it sounds super, super smart. Can I just talk a little bit about how you got your siblings when when, when all this stuff caught up to you? Yeah. How did you what how did it manifest itself? And how do you how did you? How did you figure it out? If you have how to move past it? Because I know I have a lot of stuff that I haven’t quite totally figured out yet. I feel like I’m pretty good at getting through stuff. But still, it’s kind of little pieces hanging on, you know,

51:31

yeah, I think that something’s good. So I think that like my thirst for I don’t know if it if it’s proving other people that I could do it or proving to myself that I could do it and make a really big successful company. So I’d say that’s probably on more of the positive side. But like, on the mental health side, like it hit me like a ton of bricks, it would it came in, like I never had anxiety before came in the form of anxiety and panic attacks and, and like that, that stuff still is an issue for me today. And it was through the trauma that I went through. How I get through that is like doing as much exercise as I can and meditate and doing all those things. But yeah, it’s it definitely was like a traumatic event in my life. I think that it’s really hard to for an entrepreneur to not think of their company as like their own identity. And that’s what I definitely did. So like when when your company fails is like you failed. Yeah, it’s like, no, that’s not the sound, not same thing, but it’s like mentally it’s hard to separate those things. So it’s something that, um, I think I’ve definitely gotten past that, mostly. But I think that it still does drive me to be like, Look, I did this, like really cool thing. Like you mentioned, some of the accolades, we have some sharp, like arrows is going to be much more successful based on all my learnings and and I want to go and see what that journey is gonna be like,

Kevin Gibbon  53:10

and thanks for sharing that because I that’s, it’s weird what life will do to you. Ya know, it’s, it’s weird. And as an entrepreneur, it’s even weirder. And there’s not many people you can talk about. And like you being able to talk about that probably didn’t wasn’t something that I was just like, Oh, I’m feeling this, I’m going to start talking about it, it was probably something you wanted to, you know, stuffed back down and wherever it was coming from, and just hope it goes away. And

53:39

yeah, a little bit. But also I like to and this is one of the reasons that we’re doing this, this podcast is is well, I’d also like us doing this podcast right now, but but also myself have my own Yeah, I want to share a lot of these things like I want, I think like entrepreneurship is really lonely. And if you can listen to other people that have been through similar things, it makes it less lonely. If you can develop a friendships with other people going through the same pain points you can that’s even less lonelier, but it definitely is really lonely. And but all of us kind of suffer the same things ourselves, but also I will not like I don’t want to say entrepreneurship is like the worst thing ever. Like I’m doing like I’m doing what exactly what I want what are the positives of being entrepreneurs? Like you get to build something for nothing? That isn’t incredibly exciting. Yeah. You get to make the decisions that could could be the right ones the wrong ones that’s really empowering. So I think that there’s we focus a lot on like, what didn’t go well sharpened my my learnings but like, I’m a super optimist, and I love what I’m doing. I don’t think that I could do I don’t think I could do anything else.

Kevin Gibbon  54:57

I think you know, as you were talking through that what was going through my Mind is I think one of the one of the breakthroughs for entrepreneurs to really be successful is to get comfortable not only talking about, you know, how they’re feeling, but also, but also being comfortable saying, I don’t know, and I need some, I need some help. Yes. Because you know, this, like, nose to the grindstone credit through delusional optimism and all that gets you so far. And then, you know, reality hits, sometimes, you know, and you just don’t know. And when you’re around like minded people who are doing similar type things, they get that they get that, you know, in there, and as you said, I found most entrepreneurs are very willing to help other entrepreneurs, who literally get through it. Yeah, they’re like, really like, Dude, I don’t want to see you go through that I, you know, I’ll help you however I can. Right without obligation without, you know. Yeah. So Kevin, thank you so much for making time for me, is there something that I didn’t ask you or that you’d like to leave with me and the folks who are listening? Before we call today,

56:02

I think for all the entrepreneurs out there, I think that really focus on customers and focus on customers and building a solution that truly is 10 times better than what exists out there. I think that’s, that’s really like that. The magic of of creating something from nothing, that I think a lot of people get wrong by trying to ride the wave of AI because it’s cool or something, but they don’t really understand what exactly it is, but like, trying to go deep in an area trying to truly understand the customer or trying to try to really build something that’s 10 times better than anything else that exists. And I think if you do that, and focus on your customers and continue listening, I think your chances of success will be a lot higher.

Kevin Gibbon  56:49

Nice, great advice. Well, Kevin, I wish you tremendous success with with airspace and our air house, excuse me and your podcasts second time founders podcast. Yes, air house.io If you want to find out more about what Kevin is up to. And thank you so much for coming on the show.

57:08

Thanks so much. It was a blast,

Mike Malatesta  57:10

everybody. Thanks for listening to the show. And before you go, I just have three requests for you one if you like what I’m doing please consider subscribing or following the podcast on whatever podcast platform you prefer. If you’re really into it, leave me a review, write something nice about me Give me five stars or whatever you feel is most appropriate. Number two, I’ve got a book it’s called owner shift how getting selfish got me unstuck. It’s an Amazon bestseller and I’d love for you to read it or listen to it on Audible or wherever else Barnes Noble Amazon, you can get it everywhere. If you’re looking for inspiration that will help you unlock your greatness and potential order or download it today so that you can have your very own copy and if you get it please let me know what you think. Number three, my newsletter. I do a newsletter every Thursday and I talk about things that are interesting to me and or I give more information about the podcast and podcast guests that I’ve had and the experiences that I’ve had with them. You could sign up for the podcast today at my website, which is my name Mike malatesta.com. You do that right now put in your email address and you’ll get the very next issue. The newsletter is short, thoughtful and designed to inspire, activate and maximize the greatness in you