Going from Product Lead to YC-backed CEO and $10M Raised, with Catch.co's Kristen Anderson

Welcome to Product Market Misfits, a show focused on helping founders go from idea to product market fit by interviewing amazing venture-backed founders so that you can learn from them and better navigate the wild ride of entrepreneurship. I'm your host, Dan Hightower, and in this episode we have Kristen Anderson, CEO of Catch, A benefits platform for freelancers, solopreneurs, and gig workers. Catch helps them handle their taxes and benefits, and you can find them at catch.co. Catch is venture-backed with some amazing investors, including Khosla Ventures and Kindred Ventures and the Urban Innovation Fund, just to name a few. In this episode, we cover how Kristen got into startups, the importance of speaking to customers early and often, and way more. So I'm very excited to welcome Kristen to Product Market Misfits today. First off, it's been awesome getting to know you on Twitter. So I'm super excited to talk to you today. I'd love to hear your story, like how you got to where you are today.

Yeah. So actually being born and raised in Reno, Nevada is probably a part of that. I'm first-gen college. My parents, my dad was in a union. My mom didn't work for most of my childhood and then was part-time office manager. And my parents put my sister and I through college. They also retired in their 50s and they did that because of benefits.

Wow.

And so there's an overarching story in terms of how I've thought about the arc of my career, which is to say that like financial products and services designed for families can change the trajectory of people's lives. And that's always been really interesting to me. My parents didn't make a ton of money. Like we did fine, but the middle class existed because we had benefits. We had retirement taken care of, health insurance taken care of. Those are the sorts of things that I've just seen eroded over the last 15 or 20 years as people have gone into these on-demand roles, which brings a lot of opportunity. But I think the financial infrastructure hasn't really kept pace. And so we've pulled the rug out from under people. And that's, that's why the middle class is disappearing. So that story, I think, is actually a big part of it. Like just being from a town that like, I live on the East Coast and a lot of people I meet here, oh, I've never met anyone from Nevada. I went to school in Southern California, graduated during the last economic crisis, and instead of going into the workforce, decided that I wanted to go to grad school. I was really concerned about starting my career trajectory off wrong. I had friends who were like, I'll just work at Starbucks and then I'll find another job later. I chose to take on $50K of student debt and go get a master's degree, which was a big risk. We didn't know what the economy was going to look like on the other side. I moved to Boston. I went to London for grad school, finished my master's in China, and then moved to Boston. from there with a part-time internship. So if you want to talk about like the fun stories, it was 2011. Like the economy was better, but not great. And the only job offer I had after I had my master's was an internship that paid $2,000 a month. And I took it and I was like, I'll figure it out. I just didn't, I didn't want to go back to Reno. I didn't want to get stuck in a place where I didn't think I could grow my career. And so I just decided that I was going to find a job here in Boston. And then, so I've been here for 9 years now. Found a job eventually. No, I actually turned that internship into a full-time job, which was great. So I've worked in consulting. I've been a professor. I was an MBA professor for a little while in China. I worked for a bunch of really interesting big companies in my consulting roles. I left consulting after a couple of years because I wanted to make something. I wanted to actually build it instead of just like telling other people what to build. And I went to a nonprofit. I was building products for a firm that was founded by a Harvard Business School professor. That did banking and financial products for the underserved. So I worked with Walmart. I worked with banks and credit unions to figure out how to engage people in financial services to help them save money and improve their sort of financial wellness. Nonprofit was a little slow for me. Great. It was a great firm, truly amazing experience, but I didn't feel like I could run fast enough at the things that I wanted to. So went to a venture-backed company after that. I was the first hire and head of product at a company that did student debt repayment as an employer-led benefit. And then after about a year and a half doing that, I left to go to Catch. And I think one of the interesting things about my story that I've talked about before, but I think a lot of people just, just assume that it's not this way, but I was hired as head of product at Catch. So my co-founder brought me in, not as a co-founder, but as head of product. And I think that founding story is actually really important and one that I wish more people would lean into. I think a lot of people like get really excited about an idea and they're like, we're going to be co-founders. And then they like commit 10 years of their lives to like someone they barely know with an idea that isn't fleshed out. What was great about my process with my co-founder is that each step was double opt-in and each step was like, yes, we want to keep doing this. So I went from director of product to COO and co-founder. And then after about a year and a half as COO, my co-founder was like, you know what? I want to be closer to our engineering team, to our design team, to our product itself. And you are the one who tells our story. So I took over CEO about a year ago.

Okay. There's a lot in there. Hold on. Okay. So the first thing that I, I loved was you're like, yeah, my parents have this background that makes me really excited about, or you said interested in benefits, which I think is like underplaying a little bit. Like you have this like family experience that really keyed you in on how important benefits are. And I'm not just like giving that lip service, but it's just, it's actually incredibly important. And me with a military background, like The benefits you get coming out of the military are key to like survival for a lot of people.

Yeah. And I think there's a false narrative in this country that the success we saw in the 20th century, that the growth of the middle class was because of technology and efficiency. I think it was because of benefits. Like we helped people plan for the future. We helped them protect against emergency. That's what, that's what lets families grow and survive. And that's what helps them like take vacations and provide education and like getting people educated and into these sorts of experiences. Like, that doesn't happen when you're living paycheck to paycheck. And everybody knows that. Everybody sort of knows that. But what we haven't really acknowledged is that it's the de-risking of benefits. Like, benefits used to sit more with the government.

Yeah.

Then they put that full weight onto companies and said, it's your job to provide this to your employees, things like pensions, right? Which is like nonexistent for our generation. And then that risk has been put onto to individuals. And so it's your stability is completely on you. And I think that I could talk politics about this all day, but I think the piece that sometimes gets missed is that the automation around a W-2 paycheck, which is a lot of what we try and build at Catch, the automation around things automatically going towards your future retirement, things automatically going towards your health insurance, like taking care of it without you having to think about it, is not about socialism. It is about like providing tools and to recognize that like humans don't want to sit down and figure out every piece of income they've received and how it all fits together. And so the traditional HR benefits model provided a lot of stability for a lot of families. And as we've changed the way we work, we just haven't brought any of those same technologies and applied those same principles like auto-enrollment and 401. If you talk about people who are earning less than $30,000 a year, it's not a ton of money. if you auto-enroll them in a 401, they will participate at a rate of 50%. So people are like, oh, they're too poor to save. They're too poor to save for retirement. No, they're not. It's just that they need the right tools. You can get 50% of them saving for retirement if you just default opt them in. So we have to use those principles to get people involved in those financial products. And I think that was just— my dad never talked about getting health insurance. We just had it through the union. We just had health insurance. And so I think we want to Make that available for people who also are now working in ways that look for freedom and flexibility. So gig work, on-demand work, consulting, what's the word, digital nomadism, whatever it is you want to do, you should have access to those same tools.

Yeah, absolutely. I don't really know. I don't— this isn't really a question, but I'm super like, when I see— so my dad was a doctor and he used to come home like in the— this was like in the '90s when I was like a kid. And be like, the question is changing. I used to, like, when I was young as a doctor, I used to be asked like, how much is this gonna cost? And now the question is, am I covered? And the prior was correlated with like tears and like a lot of really hard conversations around like the true cost of fully exposed, like private pay. Like the consumer is paying for healthcare. But now we have the safety net that we talk about in these terms that everyone knows. Yeah, you have benefits. But underneath all of that is like this fear. Like there is a true fear to not having these things that keeps you from being able to innovate or have a role, have a job that you enjoy. Like—

That's exactly right.

Have 4 kids instead of 1. Yeah. Because you're not—

Yeah. I knew a guy who went and got his MBA from MIT and I think had a grand total of $150K in student debt. And he took a job at Amazon because he needed to be paid well enough to pay down that debt and to have those benefits. And the story, you hear the story again and again, oh, I have to work at this company because they have good health insurance. Like what sort of cost are we losing from entrepreneurs who are stuck at big companies because they need health insurance or because they have student debt or— Yeah.

I don't know how you feel about it. Actually, I would love to hear how you think about the relationship between employers and health insurance, like generally.

It's a ridiculous construct, right? Like the financial products and services industry being distributed through employers, and I include health insurance in a financial product, by the way, because it is a financial product. It's a pooling of money to cover risk, right? That's a financial product. And We historically provided it through employers. Do you know the history of this, of why it comes from employers? Because there was like a wage cap in World War II.

It was a way of hacking the wage cap so that you could maintain or like retain.

I think it was attract and retain. It was like, yeah, get good people when most people were off fighting the war and you couldn't pay them any more money. It was a huge loophole and it was just happenstance. So it was like, okay, we're going to do it this way for now. And that was what, 75 years ago, almost 80 years ago at this point. And it's okay. So now we just do all of our health insurance through employers. One of the things that's interesting about employer-sponsored health insurance too, is that it is a plurality of our system, but it's not even a majority between the VA, between Medicare, between Medicaid. Like we have so many different systems in one, like employer-sponsored health insurance is the largest. I think it's about 48% right now, but it's by no means like the entire system.

Yeah.

And first of all, it's crazy to tie it to your employer. It doesn't make sense. It's a legacy system. It's, it was based on efficient distribution and tax loopholes from 75 years ago. Second of all, you've got 52% of the population that don't even fall into that. And so our whole system is not one system. So anytime I hear this conversation around, we need to keep the system we have, I'm like, the system we have is not a system, it's 8 systems. There's no like rhyme or reason behind it. Like, it's horrible. And it's not real choice. It's, we need choice. I'm like, what kind of choice is that? I know we have 2 plans too. We have a PPO and an HMO. And we're like, here, pick which one you want. But it's not real choice.

And so that's not choice. Especially components of

choice. Yeah.

It's quote unquote choice, but really it's, I want you to take this high deductible plan as an employer, and I'm going to shove you in this direction by how I engineer the pricing for it.

And if you think about the, like the construct of health insurance as like a general, what is it supposed to be? Again, it's finance, it's money pooled together to protect against risk. I know there's a lot of complexity, but like at its simplest state, that's what it is. And so what we know from the law of large numbers is that the bigger the group, the lower the price. And so the fact that we have 8 different systems is incredibly costly, right? And like, it's so expensive to keep making the group smaller and smaller all the way down to the individual marketplace, which is what we serve. Those plans are so expensive because it's a group of size 1. And so it's like, even small businesses like ours, we have 20 people at Catch, like, we're not getting great deals on health insurance. Like, we're getting better deals than when we had 5 people, but not by that much. What we need to do is make the groups Bigger, not smaller. It's better for the insurance companies too. I don't know. It seems like there's a lot to fix. I know you talked to Shannon. Shannon's got some, some good stuff going.

Anyway, let's take a step back. And can you tell me what Katch does?

Yeah. Katch provides benefits for people who don't get benefits from an employer. So taxes, retirement, health insurance for the, any 87 million people who are not getting benefits from their place of work.

And that number is growing. So you're riding some incredible momentum on a couple of different fronts. One of them is the decoupling of insurance from employers, like health insurance, specifically public exchange. What is it? Private exchange? Public exchange? How do you— ACA?

The marketplace.

Yeah. Is that what the cool kids are calling it now?

It's actually called the Federally Facilitated Marketplace.

We'll go with the market

for

now. There's that. And then there's this like gig economy that we can get into, but I'd love to hear about what, what you're up to within the context of these like tailwinds that you're riding.

Yeah. We, we were founded in 2016. We've been building really in earnest since probably mid to late 2017. And so we've seen this trend is not new, right? Like the gig economy is at least a decade old. Like a lot of this stuff has been around for a long time. Like independent workers are being enabled by technology. technology in ways that they were not able to work in the early 2000s. And so that was a lot of the initial work that we had done was for that world. The unfortunate side of some of the tailwinds that we're seeing is COVID and people just like losing their jobs in the tens of millions, right? Like not having access to stable employment and looking to independent work as a way to shore up their income. And their stability. So it's great that exists. I think that's one of the things about the gig economy that I find most appealing is that this idea that you could just make some money, even if it's not like thousands and millions of dollars, like the idea that you can just make some money if you need to on demand, like that's really powerful. And I think that's great. I think the challenge, and again, the reason why we exist is that as people pile into that, whether it's by choice and wanting freedom and flexibility, or whether it's by force because they can't find stable employment elsewhere, There's this immediate effect of, oh, they pay out every day. Oh, I just worked for a couple hours and then I got $90. That's so great. And people like, it's addictive. It's that like that rush of, oh, I get paid immediately. What we see is that we have this interesting sweet spot of after anywhere between 6 and 18 months of working independently that people have this like this oh shit moment of I owe taxes. Like I need to be thinking about my future. Like I have all these other things. And so the tailwinds are— we're like a secondary consequence of a lot of those tailwinds and that they've been happening for a long time. And now enough people are like, wait, I have to pay taxes on this money? Or like they do the mental math without any rhyme or reason. And they're like, yeah, I set aside like $2,000. And it's, yeah, you owe like $10,000. So they just have no idea how much money they owe or what to set aside. And so there's like just a huge gap in being able to provide those services. So it's great. It's great timing in one way, but sometimes opportunistic businesses can feel a little weird when you're like, oh, it's so great, all these people don't have health insurance and they can get it through us now. Yeah, but I wish that we like had a better system for them. So I think that's one thing about like socially like mission-oriented businesses is there's always this tension between like we're solving a huge problem that makes us feel good about the world. And it's then when that problem either gets bigger or like the fact that problem still exists is like necessary for our business. I think that's a tension that you have to find ways to like address in your day-to-day execution. And companies like Uber, like just chose not to, right? Like they made this early jump and said, hey, we're helping people get income. And therefore like nothing else matters. And all this sort of like unintended consequences of that are now starting to come to bear. And it's like a decade too late.

Okay. So you have this background at a nonprofit, you mentioned earlier that was like very oriented around a similar thesis.

Yeah, when I was in grad school, I worked with a group that was running a social enterprise competition. And so we like wrote case studies, we worked with Bill Clinton, like we awarded $1 million. And so I like ran the event in London when I was in school, which was awesome. But it was the whole idea was like, how do you build socially good businesses? And it was for business school students all over the world. And that was like my first introduction to this idea that like business doesn't just have to be about shareholders. I was in business school. I was literally in business school at the time. But it was like, you don't have to just think about what the financial returns are. And there are ways to do good business that also does good in the world. And I think that was just, it just resonated. I think it resonates with a lot of millennials. I think it resonates with a lot of Gen Z, this idea of, I want to add value in ways that's more than just financial. And so I think that was just like always something that was interesting to me, but I didn't want to go live in Africa. And like, there are people who do that and it's amazing. It's just, I wasn't quite ready to commit to helping entrepreneurs in Africa. still felt like I wanted to be fairly stable. Not that big of a risk-taker, which is ironic now that I'm a founder. But when I was at the nonprofit, I think I saw 2 things. One was an opportunity. One was a challenge that I saw with the model that they were using. The opportunity was that like, you can use behavioral interventions and technology to scale products and services that have previously only been available to really wealthy people. You can leverage how people think and behave in ways that nudge their behavior into things that are financially better for them. So one product that we worked on is called PrizeLink Savings. It was illegal in some places until 2014, when we had a law signed by President Obama, which is— it was considered gambling, which is silly. The idea is that you put savings into a pooled account, and then once a month, there's like a drawing and someone wins like the interest on that. So you keep your principal, you don't lose your principal, but you can award the interest as a lottery. So it was considered gambling, which meant that a lot of banks didn't want to touch it. And so we got a law passed to change that. And I think I saw that you could construct a program based on incentives and say, hey, if you save $250 a month, you get a chance to win $5,000. That's really interesting to people. And so we say that it's so hard to get people to save, but it's really just that we don't have the right incentives. So that was the opportunity side. The challenge side, I think, was that they focused so much on behavioral incentives and like behavioral adjustments. But they missed a lot of the opportunity of what I think technology can actually do here. And that was the whole thing I mentioned about automation and about auto-enrolling people into 401s works. We can do so much in trying to nudge people into getting 401s, but at the end of the day, if we're just like, what if we just default you into it? What if we just use technology? The core mechanic that makes Catch work is that every time you get paid, We set aside a percentage to the things that you tell us to. So taxes, retirement, time off, those sorts of things. You don't have to do anything. The technology is the automation. And so like behavioral incentives can take you only so far. And at some point we need like tech to do some heavy lifting for us because we're human. So that was the moment that I think a lot of pieces started moving for me in terms of this grand theory of ultimately what has become Catch.

And you didn't You joined—

I didn't.

You joined Catch.

I did. I was hired. We were, I think we were a year pre-launch. The team was a couple people. It wasn't like we were bootstrapped at that point. No venture funding. But my co-founder, like he reached out. I had another job. I was like pretty happy there. And so when he reached out, I was just like, I was like, I'm going to need a lot of money. Let me just like throw out a salary number and he's not a problem. And within 5 minutes on the phone, and by the way, it wasn't actually that much money. I was just like dramatically underpaid because I'd been in nonprofits. Yeah. I was like trying to correct for that. But he, within a couple minutes, was just like, oh, you have the right background for what I'm looking for. Which honestly, to this day, he is amazing at hiring people. It's like a skill that I'm still trying to build. He is fantastic at it. Like he just knows how to see the right things in people for roles that like other people might overlook. I wasn't Ivy League. I didn't come from one of the FAANGs. Like I didn't, have anything that would necessarily tell you just from a piece of paper that I was the right person for this job. And so he reached out and he, you know, told me about what they were working on. And it was just like a whole lot of things just like clicking. I don't know if it was like a Rubik's Cube or it was just like all these things that I was like, oh, wait a minute. Like these huge trends uniting automation and behavioral principles, like putting all of this stuff into one place. Yeah. That's how this has to be done. You can't do it piecemeal. You can't do it like— one feature at a time. Like the last decade of fintech has been really about just like building features. Like Acorns is a feature, right? Like when they started, it was like, we round up money, right? It's 2020. You can no longer start companies that are features. You have to start building with this idea of a platform and this idea of broader engagement, because one, it's just really expensive to acquire. But anyway, I like saw that and was like, okay, I can do that. And I was like, you know what, worst case scenario, if like we aren't able to raise any money or build anything, like It's a couple months, it's a good experience, and I thought that was like the worst thing that could happen.

It's so interesting that it's— you can build entire companies around how it's really hard to get someone to do something that's just good for them.

Vegetables versus painkillers. VCs are like, we don't want to invest in vegetables, and I'm like, maybe you should. Maybe we should figure out a system that doesn't make it so that you could never invest in something that's actually good for people and you just want to push opioids on them. Like, metaphorically speaking, VCs say this all the time. They're like, it has to be a painkiller. And I'm like, yeah, but look at our society with painkillers. Like, I don't think that's all we want.

Yeah. I think part of that, like, painkiller thing is about selling your product into a previously existing buying motion.

Yeah.

So you don't have to go and foot the bill for like market education. So the market understands how to buy a lot of painkillers.

Yeah.

So sell something like a painkiller into that buying motion and you will see growth, rapid growth. And right, I think you fit into that.

We're trying. It wasn't instant, right? It's been 4 years. Like, we've been working on this for a long time.

Like, this is really hard to get people to eat their vegetables.

It is. We're trying to be Sweetgreen, right? Like, you got to be the vegetables that are like sexy.

To take the analogy literal, I subscribe to SunBasket, which mails me really healthy meals.

Yeah. And are they a sponsor of the podcast?

Right. Yeah, no, I wish. I think I get like 3 a week, 3 meals a week. And I think my— let's say I've done it for 10 weeks. I think I've cooked Unfortunately, like 21 of them and the other just don't get cooked. I know this food is good for me. Yeah. But DoorDash is also really easy to use.

Yep. Yeah. That is such a great analogy. I think that's, that is one of the challenges with what we're doing is that we are trying to bridge that gap and that's where automation comes in, especially on financial services, is that, okay, you don't have to actually make it. What if we just shipped a really healthy meal to you 3 times?

It's really hard for me to put money aside before I pay Netflix. Like, that, that's happening in, uh, not real— whatever it is, time that I don't know of because it's automatically deducted from my account. So something has to do that for me, and there you are to do that. And it's working because I saw your tweet today that This period of this important period for you guys, which is open enrollment, has paid off substantially and at like a really different cost to acquire a customer than like last—

Yeah.

Yeah.

Go-to-market is really hard. Again, in a, in an industry where you're somewhat of a market maker, right? Like we can talk about competitors, but there's no one-to-one copy of us. And obviously everyone says that, but even just the capabilities we offer are 3 separate companies. So to talk about what we offer, so we're kind of market makers in some way, which is expensive, right? Market education, like you said. We were really insistent on knowing our customers really well, partly because there's such a big market that we can serve. We didn't want to get too far removed from our customers, especially early on. And so everyone will tell you, don't ever acquire directly, like always find channels, always find aggregators. That's always the way that you're supposed to go because it's cheaper. But early on, we just refused to do that. And honestly, I don't know that was the wrong decision because we know our customers so much better now. It helps us build the right channels. And we are serving 87 million people. You need to know which ones, like which, where are you starting? Like, how are you approaching like independent contractors? Like dentists are independent contractors. Are dentists our customers? Maybe someday, but not right now. And so I think it was like, we have been able to take some time and learn. And that's where we've been really fortunate in raising Pretty significant capital for our stage to be able to, one, build a really good product across a lot of different pieces, two, explore and experiment on go-to-market. And that means that now we're entering our second open enrollment. So the first time we did health insurance was a year ago. And entering our second open enrollment, we now know what we're doing and we know how to do it and we know the places to go. And I think it's just, it just takes some time. And again, VCs are not the most patient people. And so I think it's been, it's definitely been a challenge and a stress on us of we know we're doing the right things. And the question is just, can we buy enough time? Can we raise enough money and buy enough time to get to where we know we need to be?

So you used paid to learn more quickly. And then you did what everyone says is impossible. Everyone says paid is like crack.

It is.

You cold turkey quit crack to some degree, it sounds like, to get that cost of a buyer down. to where it is today. But

yeah,

congratulations on overcoming your potential addiction.

Yeah, paid. Yes, truly, that is a great way to describe it. Paid is such a— because it always works. It never doesn't work. It's just, it works at what cost? Like, one of the challenges is that so many other channels, they can be somewhat binary. Like, we worked with NPR. We did an NPR ad because we were just like, let's just see if it works. Cost $5,000. We got like 4 signups from it. Like it was just, it just didn't work. It just didn't work for us. And maybe there's a certain size, maybe there's a certain scale. But the thing is, if you put $5,000 into Facebook, like I'm going to get way more than 4 users. And so there's this mentality of technically paid is more efficient, but this experimentation through channels and through different types of acquisition is absolutely necessary. And so I think we, we are basically cold turkey. Like we don't use paid to acquire customers. What we do and what I think was an important realization for us, and every company is different, but We use, we pay money to Facebook and again, not very much, a couple hundred bucks here and there to boost content. So we'll make content, we'll post blogs, and then we'll put $200 towards like boosting that audience. We'll retarget some of our users who haven't converted. We'll do stuff like that. And that is way cheaper. You can put stuff on, I think even Twitter and Facebook and Instagram and like optimize for like likes of your page. And then you've got a bigger audience. And so it's not just about using those channels to acquire your ultimate revenue generating user. It's like using them to build the top of funnel. And that was all new for me. Like, I'm a product person. I am not a marketing and go-to-market person. So I think it's been like a learning experience of trying to figure all that stuff out. And definitely, I wish it took me 3 months. It took me 12. It's taken a long time.

That's crazy. It's not like Facebook or Twitter want their users to click off necessarily. So you're gonna pay. Exactly.

Totally.

Oh, that's great. Okay, so do you remember the moment when traction accelerated where you were like, oh, this— we cracked, we cracked the code?

That's such a good question because the answer is no. The answer is like definitively no. It's— I feel, and maybe this is just one of those things that 5 years from now this is all going to be a big failure and I'll look back on and be like, see, I should have known. But I feel like people act like product market fit is a binary. And as of right now, I don't believe that it is. I believe it is that you start to see shoots and then those shoots, I feel like it's more like growing a tree. And then at some point you're like, that's a tree. Is that a tree? That's a tree. And you can see that's not a tree. And you can see that there's like a binary of, is there a tree or is there not a tree? But there is this, like the process of it growing and building. And maybe it's partly because our— product is a platform. So we don't have one thing that people fit with. There's like, we have to manage percentages of what percent of people are adopting health insurance versus tax withholding. And does the whole system work? Which is maybe a little bit different than something that's just a simple SaaS product.

Yeah.

But I think that I don't feel like there's been one moment. I feel like there have been like lots of little things that like build evidence and give more confidence. Maybe that's also because I tend to be a skeptic and a cynic, like just personality-wise, I'm not willing to like lean too far into, oh, it's completely figured out. Which again, my Twitter persona might make it seem like I'm like, it's completely figured out, but we're learning and we're building and we're growing every day.

Yeah. It's like product-market fit is this like hindsight thing. You look back on it. Like you said, there's this tree and it's— I had a conversation with another founder who was like, okay, so we have this like widget. We wanted to build this like widget. And it's like not real complex. It's probably just a feature, but turns out people freaking loved this little feature, and now we have this huge dataset. So now what we are is this: we have the world's largest like neural net of blah blah blah blah blah, like VC VC vocabulary insert here. And yeah, it's not like you woke up one day and you're like, "I'm going to create the world's largest neural net of." Right. Underneath how we map data as a result of this little widget. Like you look back and said, we stumbled upon—

I think it was a Steve Jobs graduation quote that was like, you can't connect dots forward, only backwards. And he was talking about like his career. And he's, you can look at me as like the children of immigrants. And but you can't, it's more like you have to look backwards. And I think that's what happens with a lot of really successful companies is like people look back, but it's much harder.

They look at all the dots and then they write this crazy narrative over it.

It's like 50% true.

Yeah, right. No, you made up half that narrative today.

Right.

And it makes everybody else in the world, damn, they're so smart. I could never start a

company. Totally.

I'm just not founder material. I just don't see what that— I don't see all those things. No, you made up, you made up half that. Oh, that's great. So you've raised almost $10 million. I don't know how much of that was already on board when you joined versus—

Zero.

Yeah. Okay. So you raised all that. Yeah. Tell me about what the pitch was when like first money came in and like where the product was at that point in time.

Yeah. So we did bootstrapping for a while, so we raised $10 million, but like We had money before that too, because we were doing some consulting work. And so this is a big undertaking that we've built. The initial pitch, this is like the, it's so funny to say this out loud now. We knew we needed to raise $10 million to get to our Series A. And so we went around pitching for $10 million. My co-founder and I are nobodies, right? We had no like exits of note. Neither of us, we weren't number 4 at Stripe. And so people were like, are you serious? You're like asking for $10 million right now? And we're like, that's how much That's how much we need. And so this, that started probably in early 2018.

The math graduate in you?

Like, yeah. Like, how much money do I need? This is what I need. Here's what I want to do. And here's the money I need to do that. But that's just like not how the market works, especially if you're a female founder. Like nobody's going to give you $10 million unless you've proven yourself. And again, as a female founder, you've proven yourself more. Twice. So I think we were really picky. And so we got the feedback that $10 million was too much. But we knew we needed to raise $5 million. And we were just like, look, there is no point in us raising a million bucks. Like, we should shut down rather than raise a million dollars. And the thing is, we just, we knew what we were trying to build and letting a VC change the roadmap so dramatically by saying, here's a million dollars, come back with some amount of product market fit. Like, we were just like, that's just not gonna work. Like, it just isn't. Yeah. So we, and actually the first tweet I had that went viral was actually a story about our initial fundraise, which was we had a bill Outstanding from our consulting work for about $400,000. It's a lot of money, and it was a big client. And so we had this bill outstanding, and we hit Christmas time of 2018, and we just had payroll was still going out. We had 11 people at that point, 12 people maybe. So we're spending a fair amount of money just keep the team afloat. And Christmas hit, so our client just disappeared. And they're like, "Yeah, we'll get to it." We're like, "No, like you don't understand. Like." We need this $400,000. This is what's going to keep us alive through Q1. And we had been fundraising and failing at fundraising because I wasn't driving urgency or whatever it was I was supposed to be doing. Like, I just— we thought that the money would come. I don't know. I think there's a South Park meme or South Park episode that like has been memefied, which is the like these little elves in a tree and they're like, step 1, steal underpants. Like, step 2, question mark. Step 3, profit. And they're like, all we have to do is figure out step 2. And I always talk about how fundraising is like that for me, which is, it's meet with investors, question mark, sign a term sheet. And it's, what the heck is that question mark? What is the thing that happens between the meeting and the term sheet? And I think that was something, especially in my first time fundraising, that I just didn't get. So anyway, we had been failing at fundraising. We were out this money. We were just pretty sure that if the check hadn't cleared by the first week of January, that we were just going to shut the company down. We were just like, all right, we didn't do it. We didn't figure it out. We'd been live for 4 months. So like we had launched and we like had been in market and we had 4 months worth of data, which isn't a ton, but it was some. And one of our network connections who's now an angel investor, but didn't want to give us money at that time because we were like a ship going down. He told us to apply for Y Combinator. So we got into YC a week before it started. They flew us out over Christmas. Like we were there for New Year's. We interviewed that day and YC started the next day. That is what made everything come together. We closed $1 million the day that we signed the YC agreement and the $450K check cleared. So we just immediately got that little bit of money in to allow us to continue to exist. But it was really down to the, oh, another 24 hours and we would've just told everybody that we were going to give them 2 or 3 weeks severance and just closed it.

Yeah. I think that just the resurgence of the Elon Musk tweet about his story around Christmas?

Yeah.

It's like everybody's got to—

Don't fundraise around Christmas. Don't ever get to fundraising.

The show is over for if you're trying to kick off a fundraise

right now. Yeah. Even now it's beginning of November. Yeah. It's done. Yeah. So we brought in that million, but again, we knew we needed the 5. And so we raised the $5 million on top of the 1. And so we ended up closing out Y Combinator with $6.1 million in the bank, which was great. That was like, we're like, okay, that's enough for us to get started. I would have loved if that $6 million could have taken us to a Series A, but this is big. And like I said, we spent money like acquiring and learning our customers and learning, like we made progress and we hit milestones and we generated revenue and we did all that. But we raised a little bit more money over the course of the 18 months since we raised that round. Yeah. And so we've brought in some more money. So we're now at $9.6 million and we're going to be raising the Series A next year. So it's a lot of money to have raised, But what's just so ironic about all of it is I'm like, man, if someone had really believed in us, they could have just given us the $10 million. And how much money would I have freaking saved not having to fly across the country to fundraise and all the time that I wasted and all of that stuff? Like, we knew we needed $10 million and we just like— We told you guys.

We tried to tell you that we needed—

We did. You didn't believe us.

How was Y Combinator?

So we were in a really different place than I think a lot of companies that go through it. We had a team of 12. So my co-founder and I flew out from Boston, which is where we're based, and lived out there for 10 weeks. But the whole team was still here. And so it was interesting that we were doing standups every day at 6:00 AM, right? To just stay on schedule with the East Coast. And I think that just made it really different for us. 'Cause like we had a real company. Like there are a lot of YC founders that like have an idea and it's just, they're just the co-founders or like maybe one employee. And so I think for us, it was like, It was a tremendous opportunity, great network, truly drove urgency in our fundraise in ways that like nothing else ever has. But it wasn't— I was also over 30. I feel like if I had been like 24 or something, it would have been a different experience. But it was just like a lot of really young. And so a lot of people were just like, we're gonna hang out and drink tonight. And I was like, yeah, like we got standup at 6:00

AM. I get hangovers now.

Yeah. So it was a good experience, but I think we, Also, our batch was really big. We had— I think we were actually one of the last batches before they went remote, but we had 500 people. There's 200 companies and 500 people. That's like a college class, right? Like, that's— you don't form these really close bonds. And it felt like every time we went to an event, I met new people. So it was like hard to form relationships because there were so many people that every time it was like your first meeting. And so I don't know, I think I really value it for the network and some of the connections that we've made from that. But it wasn't, it wasn't like the collegial experience that I think a lot of

people

have told us it was.

Did you pick up any team members from Y Combinator?

No, because they're all on the West Coast. That was the other thing is we didn't want to have a team that was split. We, I know this is contrarian in 2020, but like we really value in-person, like co-located teams.

But cool. So speaking of team building, Do you have any tips for team building? You mentioned your founder has this uncanny ability to find the right person for the right role, like Moneyball style without the Ivy League stamp of approval or the FAANG membership. So I'm curious if you have any sort of insight into what gives him that uncanny ability.

Yeah. Yeah. I think Moneyball is a good way to describe it because like I thought I was asking for a ton of money and he was like, oh yeah, no problem. And I was like, shit, I should ask for more.

He knows something that I don't.

Yeah. I was like, wait a minute, what? But I think hiring is like one of the hardest things that you do at a startup. When investors will always ask you this question, what keeps you up at night? Or what are you afraid of? What are you worried about? They always want to get that because they want to know what they should be worried about. And the thing is, you have to be so careful on the answer because sometimes if you're like too transparent, they're like, oh shit, that is scary. And they won't invest in you. So the answer that I always give, this is maybe like giving away too many of my tricks, but the answer that I always give, because you just like can't debate it, is team. It's having the right people in the right spots at the right time. Yeah. And that's the thing that I think is most difficult. And it's true. Like, I do think that is the hardest job that I have as CEO, is finding those people, keeping them happy. Your trajectory at a startup is so steep that the right person in the right role can change really quickly. And it's like, how do you keep strong enough relationships to be able to be honest about that and all that sort of stuff? So that's always the answer I give because it's It's good and it's real, but it's not like frightening. It's not, oh, we're worried that the Supreme Court is going to get rid of the ACA next week. If I tell them that I'm worried that the Supreme Court is going to get rid of the ACA, they're going to be like, oh yeah, we're not going to invest in you. So in terms of like how—

Also giving them a great thing to tweet 5 minutes later.

That's the hardest thing. People, the right time. Yeah. So I think what my co-founder does that's so interesting, and I wish I could replicate it, I don't think I've been as successful at it, is that He is really good at seeing the essence of what the role is. I think that you make a long list in your head that not everyone's going to have everything. And so you're making trade-offs, especially at a startup, because you can't often afford the perfect candidate or the supposed perfect candidate. But it's like, what is the essence of the role? And what are the non-negotiables? Like, what are the things that like we can't negotiate on? And oftentimes the things you can't negotiate on are less about the role and more about the like personality. And like, those are the things that often are hardest to like—

No assholes.

No assholes. Like someone who's comfortable with ambiguity. What's interesting is that because we started bootstrapping, we actually had a lot of really early team members who didn't have the right personality because they had a full salary from day one. I was included in that, by the way. Like I had a salary, but sometimes it was like, there was this mismatch of it's 5:30. I'm going to go home. Work-life balance is really important. Right. And it's not that we want to work people until midnight every day. It's just that, like, the DNA of being comfortable with ambiguity, being okay with the fact that, like, things aren't always going to be super clear, is almost more important than most technical skills in most roles. And I think that's the thing that we've come to realize is that hunger, like, ambitiousness, like, comfort with ambiguity, like, all those things you can't train. Like, you can't teach people how to have those. And that potential is— you're searching more for potential. You called it the Moneyball thing, but that is, it's that delta that you're looking for of, I don't want to hire the perfect person for the role that I need now. I want to hire the person who like this company 6 months from now is going to look different. And I want to hire this person to be there at that time. So you're like trying to like, what is it? I'm sure there's like a physics analogy of you're trying to like shoot a rocket and have it like hit something at the right time with a satellite. And that's kind of what you're trying to do on a startup team, which I think is fundamentally different than like how big companies—

Hire you into a fixed role. Versus— yeah, this makes a lot of sense because so in my current day job, turns out I don't podcast for my day job.

Not yet.

Yeah. I work at a really small startup and, and I'm curious if that meets your like customer profile.

Yeah. I think people miss sometimes like how many people Catch Conserve and the different types of people that it's helpful for. Any— that's why we like struggle sometimes a key marketing statement, benefits for people who don't have benefits from an employer. It's a little bit wordy and it's an anti-statement, but I think what that is meant to describe is that it is often startup founders. It is often people who are early employees at startups. It is people who don't have these things taken care of, who like, like technology and want an app that sort of makes it easy, especially for health insurance. I think the, the ability to have a tool that can help you compare plans Get the best deal. Like we help people enroll in the tax credits that they're qualified for. So if you happen to be a founder and you're not paying yourself a ton of money, did you know that you can get a huge discount on health insurance through the ACA? So I think that those sorts of things can be really helpful, even if people like don't, they don't self-identify as like gig worker or independent contractor. This is something that really is meant to go much bigger than that.

Yeah. And income is getting weird. These days you can be a straight up like employee, but have written something, some like guide that you sell on Gumroad. And like you wake up one day and it like went viral and now you have $20 grand that you need to pay taxes on or something like that. So

that, that is exactly, that's the trend that we see continuing, right? Like we, and maybe it's just because we work in financial services, but we don't see the story of the gig economy and the independent economy as like jobs. We see it as income streams because there are all these ways to monetize your assets and your knowledge and like all these other things you have. And so as you add in multiple income streams, all this stuff gets way more complicated.

Yeah.

Right? Like taxes and like retirement and like just making sure it's all set up and it's all automated. That is what the next decade is going to be like. It's very uncommon. I think it will be very uncommon for people to have just like a single income stream that they earn consistently every 2 weeks.

Doesn't— I don't know if you ever heard this from your like high school, you know, career counselor who—

In Reno, Nevada.

Yeah, I was considering like a gap year after high school and that was just like suicide.

Yeah, so I wanted to go to Yale and I got rejected. I'm a Yale reject. And so I told my parents that I was gonna take a year off and they just laughed. They were just like, haha, like, what does that even mean? They're like, what are you gonna do? And the thing is, I didn't have any good answers. So I think that was probably part of the problem is that I didn't actually like have an idea. I don't know. I don't know yet. But yeah, it used to be much more like you had to go. Well, and then of course our generation now, like, they just put us in college and told us to get degrees and now everyone who has a poli sci degree is like hugely in debt and has no idea why they went to college.

But you told me if I went and got a degree, I'd have a job. Yeah. Yeah. It's crazy. And then it's funny, you didn't know, but all of a sudden you're a founder. I'm curious if you, if you always knew that you were going to be, how did you know you were going to be a founder? Did you always think about yourself that way?

I still often don't think about myself as a founder. I think, I think it's an important part of my role and I think there is certainly an identity that I've taken on. to solve this problem. But a lot of times, like, I think people who are really into startups and startup culture, sometimes they have that. They have that, the person who, when they were 8 years old, they knew they wanted to be a teacher. A lot of entrepreneurs are like, I always knew that I wanted to be an entrepreneur. I have to work for myself. I'm the boss. I definitely didn't have that feeling. I've worked for other people for most of my career. And I think that there's different approaches to why you are an entrepreneur and why you are a founder. And for some people, it is because they want to found something. And there's nothing wrong with that. Creating is awesome. Like, starting companies is awesome. For me, it was that I wanted to solve a problem. And the best way for me to solve that problem is by founding a company and by leading a startup that solves that problem. So I think it just There's an importance to recognizing there are many paths to being an entrepreneur and that no angle of it is right or wrong. And I think as we think about making space for different types of founders and people who have like parents, for example, there are people who like start companies when they have like little kids. I don't know how, but like we should make space for different types of founders. Like the sort of stereotype of the 23-year-old guy who's got a computer science degree who goes and works in a garage for 2 years and that makes millions of dollars. That is such a small percentage of what founders are and who founders are. And I think it's just important to know the stories that can make up different backgrounds. And I think there's— I don't know her, she wasn't in my batch, but there's a YC founder who has 2 small children and she went through YC when she had 2 small children. And I think just stories like that are so important around how do you think about it and why did you do it? And there's just a lot of different pathways to becoming that sort of entrepreneur founder Visionary type person, and none of them are inherently better than the other. And I think that's just like something that has made the journey like lonelier for me. And so I hope that people know that there's, there are a lot more people out there than that. I think the number one founder in the country is like a small business owner, right? Like it's not a VC-backed startup. It's someone who just like owns a small business. And so I think that we just have to broaden our definition and our reach for those sorts of things.

You're right. Make these paths easier too. There's founders who I know, one, one woman who like cares for her ailing mother, like who's, who's on the older side at the same time, uh, she has her company. So it's like a lot.

Yeah, it was a lot. People are living lives and honestly, so I, again, I don't believe one way is better than the other, but I do think it's important for all of the types of companies that we need started, we need different points of view on who's starting them. And so I think that can come through in culture, and that comes through in hiring, and that comes through in all of these different things, in the problems that we're choosing to solve. If everyone who's starting a company looks exactly the same, the types of problems we're gonna solve get pretty mundane.

Yes.

And I think that's like having that experience of knowing— we have someone on our team who was, I think she was born in Ecuador, but raised here by her grandmother. And as we started our health insurance build, she just made a lot of really important points about assumptions that we all made about nuclear families. And I think that's just like such an important thing. Oh, the person who you're applying with might be your grandmother and not your mother. And it was just like, that sort of perspective is so important in like how we solve problems and how we like make tech more inclusive.

Yeah, totally. Okay. Is there anything you want to tell anyone who who may be in need of benefits right now?

Catch.co is our website. We're also iOS and Android, Catch Benefits. We are super available. One of the things that I'm most proud of our team is that we consider like our support and engagement team part of the product. So we take a lot of pride in that we have people available to like answer questions and be helpful. And they are not like some outsourced call center. They are like real people who live and work in Boston and make tech salaries because we think it is that important. important that we have people who are like really highly trained. And yeah, so like we're available to help. And open enrollment ends in most states on December 15th. That's an important deadline. Some states have extended it, but just go for December 15th, get it done. And that's how you can get coverage for 2021.

And that's catch.co/something?

health.catch.co is the—

health.catch.co for health

insurance. Yeah.

Awesome. Thanks for time. This has been awesome.

Great. Thank you so much.