Intentional Co-Founder Partnership & an Unpredictable Market, with Justine Palefsky & Tas Amina

Justine and Taz, welcome to the show.

Hey Justin, thanks so much for having us.

Thanks for having us.

Yes, I appreciate the time. Kindred is a company that as soon as I saw this, I was like, oh yes, definitely wanna talk to them. I'm very interested. I signed up for the waitlist, all the things. How did this company get started in the first place though?

Yeah, so Taz and I really created Kindred to solve a problem that we were experiencing at the time. Like many of our friends, we were sitting in the pandemic staring at the same wall, you know, day after day thinking, I feel a little trapped. I want to mix it up. I want to be able to go live elsewhere now that I have more flexibility. And we were just really struggling to find a way to make that possible. It felt like the only options for us were either really expensive to leave your home empty and continue paying rent or your mortgage while you pay for a vacation rental or hotel. Or to get rid of your lease and your home altogether and become a digital nomad, which was fun for a little bit and got old pretty quickly. And so, we really kind of gave ourselves the design question of how can we make it radically more affordable to travel more and live a more flexible lifestyle? And we put our heads together. We actually locked ourselves in a cabin together for—

Really?

Like a couple days, uh, and with a whiteboard.

Such a great founder story.

Yeah, a whiteboard and some White Claws. We filmed some TikTok videos that no one will ever see. Um, and, and we, we realized that, uh, you know, we came up with, with a couple ideas that we wanted to, to test. Um, and when we started talking to customers, we, we really kept coming back to this idea of, um, uh, helping communities organize amongst themselves to connect people who trust one another to just Stay in each other's homes instead of having to get a vacation rental. So, by working together with people you already know in your extended network, you can all kind of unlock radical access to staying in beautiful homes that are often nicer than the places you would be renting because they have workstations and they have Pelotons and things like that.

Yes.

And actually pay just a Small fraction of the cost of what you would be paying for a rental. So that, that was kind of the origin of the idea.

Okay. I have so many questions. I want to come back to the early customers in one second, but first you say we, so it's interesting and unique to have both of you here at the same time. How'd you decide to work together on a startup? Because this is something that I talk to a lot of founders. How do you find your co-founder? I'm just curious on what got you, both of you to work together. Maybe Taz, go first.

Yeah. I mean, you know, I, we love talking about this story because I think that more so than a lot of other people that, that we've met, we've really put a lot of thought into choosing to work with one another. So the background is that Justine and I used to both work at Opendoor, which was a company that we were both a part of a couple of years ago. And we knew each other socially, but weren't on the same team at the company. And Justine had actually left Opendoor to go to a different company named Homebound. And so we hadn't even worked together for a couple of years before we started Kindred. I had just left Opendoor. I was on my sabbatical and I wanted to start a company. And I'd reached out to our old CEO, Eric Wu, who was one of my mentors and I was very close to. And I said, hey, here's sort of the thing that I'm thinking about in the remote space. What do you think? And he goes, he's like, you should definitely go do that. By the way, you should also go talk to Justine. Justine's also thinking about starting something in that space. So it turns out both of us were independently sort of living the same life. You know, like we were both thinking about like leaving the company or had already left the company and were, you know, talking about starting something of our own in this space around remote life, work flexibility, just sort of this idea around travel and community just really appealed to the both of us. And it felt like we were kindred spirits in that regard.

Yeah.

And so from there, once sort of that connection was made, we just kind of hopped into a room and what was really surprising And I think looking in retrospect also wise in some ways was that we didn't really spend as much time talking about the idea because both of us had spent a ton of time building early products before and knew that if you generally have a sense of what problem you're looking to solve for, the exact product is going to change over time. You're going to iterate that. It's going to be different. And so there's no point in, you want to have general alignment of the problem space that you're working on, but there's no point in hammering out every single detail because your customers are going to tell you what you want. But one thing that doesn't change once you start a company is your relationship with one another. So we spent a ton of time on what we call the partnership charter at that time. And I forget the book that you were reading. Was it called The Partnership Charter?

It was called The Partnership Charter.

So Justine had read a book called The Partnership Charter. More suggestions. Yeah. And she was like, hey, I think one of the things that we should talk about is having the really hard conversations upfront. And so We asked each other tough questions, like, you know, what are— not only cover the basics, like what are our strengths and weaknesses, but things like, you know, what are the things that given our personalities, you know, what are the things that we may see eye to eye on, we may not see eye to eye on? How do we feel about, you know, how do we feel about making decisions? What if we disagree on decisions? Do we both subscribe to the principle of disagreeing and committing? Where are the differences? Because we're not going to be 100% similar either. So where are the differences? And do we think that these are foundational differences? Or do we feel like these are more tactical differences that we can solve for operationally? And what we found through that exercise, and that exercise probably lasted a month, one week of which we actually just locked ourselves in a cabin, as Justine said, and hammered it out in more detail.

That's right.

But during that exercise, I feel like one thing that really came through was that we were very values aligned. We were very values aligned on the type of company we wanted to be, the type of leaders that we wanted to be, how we wanted to treat our employees, what type of culture we wanted to build. And all of that felt so aligned. And also the amount of trust and respect we built for one another during that period of time. I always knew Justine was excellent professionally, but there's that personal connection that we always joke that we're married. She is my first wife.

Also, We got rings.

We did get rings.

We committed.

We went all in on the commitment.

I love it.

But yeah, amazing.

It was a wonderful time for— it was a wonderful and well-spent period of time, I would say. Yeah.

Yeah. A month. Yeah. A month at a time. I've talked to so many founders about this and like that time period, people are like, how much should you talk to them? Some people know like right away. Some people, you know, you have past experience. It takes a while to kind of hammer out those questions, but those Questions come up later on than if you don't answer them early. So it's like, you might as well chat about them right away.

And I think people don't realize when you're about to start a company, you're taking on all sorts of different kinds of risk. There are some things you won't be able to control, like the market conditions. There are some things you will be able to control. And one of the biggest risk factors for an early-stage startup is actually co-founder issues. That is the reason more often than not that a company fails, um, is like they're, uh, in those— in the very early nascent stages before they've ever raised, you know, uh, like money or anything. And, um, and that was a really interesting— when we were actually pitching Elad Gil on the business, he turned to us and was like, you know, I was an early investor in Airbnb. I get this. I get this business. I see there's opportunity. You don't need to convince me more about this business. I've seen what you guys did at Opendoor. I want to just spend this time talking about you guys and your relationship because that is always underestimated. That is something that if we're walking into this without a super strong relationship, that's a tremendous amount of risk that we as founders should have under our control. We should be able to choose that. And so, it's unnecessary risk, I think, walking into a co-founder relationship without having kind of put in some of the time and effort to Make sure that you can get through the hard stuff.

And from that, so you have that solid foundation that took a month to talk about different things and everything. And the timing of this, you just announced, so this is 2022. So in like April of 2022, came out of stealth. You start this in March, April of 2021. This is still like pandemic-ish times. So take me through all of that thought around, okay, we're gonna launch this, this kind of home network. Just take me through the thoughts around that, the timing of when you launch.

Yeah.

So for us, we knew that the pandemic was resulting in just this seismic change in consumer behavior. And that was, as entrepreneurs, actually really exciting. It's an opportunity for us to think, okay, what's different now? What have people learned that they want in their lives that maybe a year ago they didn't even realize they learned? And what are the things that are going to persist even after some of the fear around the pandemic has reduced? What are the ways that we're not going to go fully back to the way that it was before? And one thing that we really believed in is that people are now expecting a more flexible work environment. So, there are way more remote-first companies. But even companies that are not remote-first, they're much more remote-flexible, where people can— we've learned that you can actually do meetings over Zoom and like things don't fall apart. And so—

Yes.

People have so much more location flexibility. And we knew that that was just this step function change in consumer behavior. And so, while it was kind of in the midst of the pandemic when we started thinking about this, we also knew that this was a moment for us to kind of invent the future and bring to the world a service or a product experience that could serve a need that had emerged in kind of stark contrast as a result of the pandemic. And then I also think that there's a moment that, like, I don't know if you experienced this, we certainly did, but a lot of us kind of reevaluated things in our lives during the pandemic.

Totally.

I feel like a lot of us had moments where we're like, what do I What do I want? What do I care about?

Yeah.

How do I make my life feel really fulfilled? And through that introspection, I think we both came to the realization that we would forever regret not taking this step to go build something. And this is, I am not a person who was born with endless wells of confidence. taking the step to go start a company was scary and really exposing and it made me feel really vulnerable. But I think that period of reflection during the pandemic really kind of got me over the hump to being like, you know what? I got one life to live.

Yeah.

Let's go. Let's go.

I'm gonna do this now.

I know I need a badass co-founder at my side 'cause I'm not gonna do this alone. But having Taz made me feel empowered to, you know what? Let's actually stop dreaming and start doing.

That, there's so much to discuss and dissect in that. So what I wanna go back to still though is the early, early days, decided to start the company. Take me through like the scrappy early days of beta testing with customers, getting your first customers. That I love marketing and all things acquisition. So I'm biased in that way. I have to know like how you went about that and how it's kind of evolved since then.

Yeah. So I, in the very beginning we said, we know that trust is a really big component of sharing your private, your private home or your primary home. And so one of the things that we knew from the very beginning is that we probably want to start with our network first because those are the people that trust us. And as a result, you know, it's more likely that a friend of our friend is more likely to trust, you know, Justine's friend of a friend because we are connected, if that makes sense. So we knew that we needed to get our networks on Kindred first. And honestly, we had a lot of open questions, right? We had questions around Is it always in the very beginning when we started Kindred, we were always thinking a one-to-one swap, and then very quickly we realized that we need to make room for people to not necessarily have that be one-to-one. So like that's where we came up with the concept of credits on the platform. And so there were a lot of unknowns at the time that we knew that we had to kind of start small and understand those dynamics before we sort of you know figured out how we wanted to grow, what channels that we wanted to kind of tap into in order to grow. So. As you can imagine, the first thing that we did was kind of reach out to our friends, you know, and we reached out to like 30 of our friends and we said, hey, we're going to start this. You know what? You know, can you send us a video of your home? So we had a bunch of our friends send us video walkthroughs of their homes and they sent us, you know, a couple of suggestions around where they're looking to travel and when they're looking to travel. Pretty soon we figured out, as I mentioned, that, you know, they should also let us know when their home is going to be available. if they already have planned travel. So at the time, I think there was a brief break from whatever COVID wave we were on at the time. So a lot of people were booking international trips. So some homes were open and we were starting to do that trip matchmaking manually. So Justine and I are not coders, but I would say we can be pretty dangerous with the right set of tools. And so we built a Readymag page, which was sort of like the no-code website. We built some Zaps, that put everything into our Slack. We had an Airtable that was our backend database, and we were doing these trip matches manually. So we would sit and kind of go through 30 people and we would be like, okay, who can go where? When could they go? And one funny story that we like to tell is that I think it was the second Friday after we launched, we had about 30 people of our friends who'd already signed up that we had some form of videos or photos or something for. And we had about maybe 10 match emails that we could send that we thought were good matches. And keep in mind, these are our friends. And so on a Friday evening, we send the email and we're just so excited. This is our first email that we're sending out and we think we've made some fabulous matches. We think some of them are slam dunks. We were waiting, Saturday happens, Sunday happens, Monday happens, and we got no responses on our first set of matches that we sent out.

And they were our friends. And they were our friends. We were like, if we don't get responses from these people, Like, what does this mean?

What is going on?

I guess people don't want to home swap. Yeah, I, I think there's one, one lesson there, uh, that— and, and so, by the way, we ended up switching over to texting people not on a Friday afternoon and built out a private Instagram page, which was a huge unlock for distribution because email gets crowded and people are working and whatever.

And it feels like something to do. It feels like a task. You know, when you're, when you email someone, it feels like something that you kind of have to read through and respond to. And it feels like work.

Totally. But I think one of the big learnings, and Taz, I'm really just repeating one of your tweets, is that like, if something's not working, you know, you, you, there is a little bit of work to do to understand, was this the implementation or was this the idea? You know, because in that instance, we just changed the implementation and we got a way different response. And it turns out the implementation of sending an email on a Friday afternoon with Dropbox links to videos that people open and they're like, ah, I'll do that later, is not actually the right implementation. And so I do think that there's a certain amount of rigor or grit that you have to have to stick with it and try out different implementations. And we both have always been pretty optimistic people. We have what we've referred to as pronoia, which is an amazing word that's sort of like the opposite of paranoia, where paranoia is like you feel like something bad is about to happen and pronoia is like, You just kind of feel like something good is about to happen. And so we started laughing and we were like, this is going to be a great story when we're a billion-dollar company.

Exactly.

Exactly.

It's all part of the plan. Yeah. Let's get back to work.

Yeah.

And the iteration in the early stage is so important. I was just going to say the iteration in the early stage is just so important.

So actually then from getting your friends eventually to try this out, like what were you, what was the feedback you were getting in the early days? What were you just, you know, Figuring out from that early customers?

Yeah.

So what we ended up finding was that when we could facilitate a trip, people were over the moon excited. And then the product sort of sold itself because people are so— people have a lot of built-in sharing behavior already around travel. So when you go on a trip, you put it on your Instagram, you put it on like Twitter. Um, and, uh, and so people would, uh, would, would put it on their social media. The other kind of referral kind of flywheel that came up was actually Zoom chats with people's coworkers. So they would join a meeting and people would be like, oh, well, hello, Justine. Like, looks like a new background for you. Where are you today? And then Justine would be like, I'm actually in Lake Tahoe on a home swap.

Mm-hmm.

I'm in a 5-bedroom home. You know, in Tahoe here for 10 days and I'm paying almost nothing. And people are like, wait, what is that? I gotta know. I gotta hear about that.

That's so great.

And so, we heard so many stories of when people are dialing in remotely from these homes, it just ended up, it just ended up kind of resulting in tremendous organic growth. And so, we actually, in those first kind of months, we ended up, we were growing like 50% month over month without even asking people to refer people.

Most people didn't even know that they should be referring other people actually, because, because, you know, they, they, we kind of had messaged it as a private beta at the time.

Yeah. And so what we found was when we can get people on these trips, like then we've unlocked something really magical. And the challenge was more how do we get people from the point where they're like, home swapping, this is an awesome idea, to actually finding fantastic matches in a really seamless way. I think actually for us, like, that's more of the challenge. We've found that this is an idea that people generally are excited about, and once they go on a trip and get that really human experience, um, uh, they love it. Um, but we needed to, to refine over time how do we think about, um, uh, increasing that match rate. And reducing the time between when somebody joins the network and when they find a really exciting trip to book.

From this too, so to that point, that's kind of like your North Star, it seems like, is that as one of the metrics, at least I'm seeing that. Take me through the business model behind it, how you decide on the business model pricing, what this community would be, because that's always something too, where founders are thinking about different ways to unlock value and figure out what's best for both people. Like, how did you just think through that side of things too with Kindred?

Yeah. I mean, pricing was actually, it was, you know, our, the process to figure out what pricing would be was actually quite a long and fascinating one where we talked to, and we looked at a lot of different existing models out there. We looked at other marketplaces. We looked at, you know, what consumers, we, you know, we talked to, spoke to a ton of our consumers to understand how they were, how they thought about it. One thing that Justin and I were very principally aligned on is that we wanted to always be radically affordable relative to other solutions out there, right? So it wasn't, we didn't wanna be 10% cheaper or 20% cheaper. We wanted to, what we wanted to do was be so much cheaper that we were unlocking latent demand.

Yeah.

Right? That we were unlocking demand that people can't actually afford to realize in the market today. Because our hypothesis was that, you know, if, you know, putting random numbers out there, but if there are a million trips out there, we actually think it could have been 2 million if only people had, you know, more affordable way to travel. So what we were after is just expanding that base of travel altogether, and we knew pricing was a pretty big input to that. The good news is that one of the things that Kindred is doing, just by the way that, you know, the sharing model works, is that we're automatically eliminating the nightly fee that you would have otherwise been paying when you're renting a home, which is the vast majority of the cost of, of, of traveling.

Right.

So if you're taking a trip, it's not actually the cleaning fee or the service fee. That's the, that's the problem. It's the fact that when you're staying somewhere for 10 nights and you're paying $300 a night, that quickly adds up to $3,000. And so The first immediate thing we realized is that we want to, by eliminating that cost and making sure that the swaps always stay free from a people not paying each other perspective, we would always maintain some level of that radical affordability. From there, we had a couple of levers that we could think about. We could think about, do we think about a membership model? Do we think about a per-night for a services model? Like, what is the— what makes the most sense? And, you know, there's a lot of considerations. One of them is you don't wanna price it so high that as you're starting to build out the network, you're actually preventing people from joining in the first place and not able to build out the liquidity in the marketplace that is then required for people to realize that value. And then we talked to a bunch of customers as well. And I think one of the things that we heard feedback around is that, you know, I don't mind paying to be part of like a network or community as long as I feel like I'm getting recurring value out of it.

Yeah.

And also that people didn't mind paying at the point of booking the home because that's when they actually have a home in front of them. They're looking at it and they're like, wow, you're telling me I can go to this home in Miami for $300 for, you know, a full week? Sign me up. Right. And so we had to sort of like balance those considerations where we knew that we probably did want to have a membership fee in the very beginning because there's, we felt strongly that we wanted to have active inventory versus inactive inventory. So we didn't want to onboard 20,000 homes in the platform only to have 1,000 of those homes actively engaged, which we think is a pretty poor customer experience from a marketplace perspective. However, at the same time, we don't want that fee to be so high that, you know, that members have to like kind of almost believe that they're going to get value out of it before they ever book their first trip. So that was sort of the trade-off that we were making and the, you know, some of the decisions that we were considering. Ultimately, what we made the decision around is we're going to do a $300 membership fee, which unlocks access to unlimited swaps in the platform. And then each time you book a trip, you're going to pay $30 a night for all the services that we provide. And then just the cost of cleaning for the home.

Yeah. There's so many levers that you can pull on that. And obviously that is, to your point, not a 10% difference. It's much bigger savings than what you see out in the market, which is why it's so compelling. And I know we have a few minutes. I want to make sure we talk about the fundraising side of things. You mentioned Elad Gil and some of those questions that he had early on, but you also raised from Andreessen Horowitz and some other amazing angels. Just take me through that fundraising process, your experience, what you wanted from that in terms of your investors. I'd love to hear more about that too.

Yeah. So we raised a total of $7.75 million to date, I believe the number is. And that was kind of spread out actually over an initial pre-seed and then a more formal So initially, we actually just went out, and I would recommend this to other founders. If there's somebody who you know, who really, really knows you and trusts you and can be high conviction, start there. And for us, that was the CEOs of the companies we had worked for before. We go to them. They know us, they know what we can do, they trust us, and their first checks in are then really, really helpful for us to go in a kind of position of strength to talk to other folks. And so we started with Nikki Peckett, who's the CEO of Homebound, and Eric Wu, the CEO of Opendoor, and they said, we'll back you. And then we said, who do you think we should be talking to? And they introduced us. And I do think having that warm referral makes a big difference. Like, we didn't cold email anybody because we just sort of kept pulling the thread of like, and who have you worked with before? Because really, founders are really great people to make recommendations to investors. I mean, on investors, they know like, who do you want in your corner when shit hits the fan?

Exactly.

And so, we just asked for a lot of referrals. And were able to meet a lot of tremendous people. The other thing that I would say is our experience at Opendoor ended up giving us a lot of different kinds of gifts. It was an incredible experience being there from 14 people in headquarters to 1,500 people in headquarters and the company IPOs. And I knew that I wanted to be an early employee at a company that ended up doing well. But I almost didn't realize that the majority of the value actually would be from like the network, like our peer group now.

Yeah.

There's so many founders who used to work at Opendoor. So, we're in a Slack group with other Opendoor founders who are all starting companies, and we kind of have our own little crew. And that's been tremendously helpful for not only morale and kind of mutual support, support, but also for introductions to investors. So, really, that's kind of how it went. We did a pre-seed. We raised $1 million when we, like, the first kind of week I left Homebound, when we were like, we're going to start something. And then, once we started seeing traction, that's when some of our existing investors said, hey, like, do you want to take more money? And we ended up raising on an uncapped note at that point. And just like took a little bit more money because we were like, well, you know, the market's hot. Like, we love these people. We want to get them in our corner. At the time, the market was hot. And then I think that our match rate and our trip rate and our engagement was just really, really high. It was much stronger than even we anticipated. And when you have moments of momentum, I think that it's helpful to go raise money before you need to raise money, when you're in a position of strength. And so, we ended up talking with a few folks and raising our seed. We actually signed the term sheet in the end of November of last year. And so, we just didn't announce for quite a while.

I've talked to many founders, the same thing. They're like, 6 months later, like, oh wait, what? Oh yeah, we actually raised that.

Yeah, I will say though that the market has changed now. Like, we raised our seed when things were much hotter. We're chatting a lot with our investors. It's a really interesting time to be recording this podcast. Like, as we've all seen, like, there's a lot of uncertainty in the macro environment right now. People are not sure if there's a recession coming or what that'll look like. And with that kind of uncertainty means founders need to do a lot of kind of contingency planning because we're not going to be able to tell the future. But there's a worst-case scenario we need to prepare for. And so, I will say that we were kind of lucky that we were able to ride some of the kind of hot market.

Yep.

And we raised when we did. But I think that it's a little bit of a different game now. I expect raises to take longer. I expect relationships to need to kind of take longer to get to know people. And we'll see where we go from here.

Well, to that point, I know we're out of time, but you raised almost $8 million. I saw on your website, you're definitely hiring. Take me through some of that and what's the next steps for Kindred?

Yeah, we are hiring, special emphasis on engineering, but we're kind of hiring across the board now. And the next steps is really just to grow out our team and build our technology, both our our app and our kind of internal matching, which is a really interesting kind of recommendations-based approach, like algorithmic approach to matchmaking between people for home swaps. And so really, we're just hustling to scale our infrastructure so that we can meet the demand that we've seen and get more people in off the waitlist.

Where's the best place for people to learn more about Kindred and connect with you if they'd like to as well?

You can sign up on livekindred.com, and then if the— if you have an invite code, you can skip to the top of the waitlist. Otherwise, you can sign up for the waitlist as well. We definitely encourage it since we review waitlist applications frequently based on where we're seeing the most demand. And then you can find us on— we have Twitter accounts, although I have no idea what my Twitter handle is.

Taz. Hers is Taz.

Thank you, Justin.

We made our Twitter accounts recently.

I did notice that. I was going to say something. But go ahead.

We're not Twitter natives. Can you tell?

Yeah. So I you know I might not actually tweet, but I'm there. And then yeah, probably the best way to connect is on LinkedIn for the both of us.

Perfect, Justine and Tess. Thank you so much for your time today. Really appreciate it.

Thank you so much.

Bye.