Track Zach Marshall #3: 10x-ing your company in 4 Months
Third episode in our quarterly-ish “Track Zach” series, where we follow Zach Marshall as he builds the private security marketplace, Conterra.
Today, we explore the pivots and progress Conterra has made in the last few months as well as some predictions for the company’s direction in the future.
Zach refers to the private security industry as a “dirty industry of relationship arbitrage” and his mission is to fix it. Conterra can increase the quality of life of one million workers in the security space, while making security purchasing easier, cheaper, and better.
16 things I learned from the episode:
“Err on the side of aggression; moderation is for cowards.”
Conterra has gone from $15K in total revenue to $25K revenue just in May. The target is 250K by the end of the year.
He hired a badass new partner Kurt, who has a ton of valuable experience.
Zach is currently focusing on fundraising. He is wrapping up the final pre-seed raise for 200K.
Conterra’s website is focused on one of the products for high net worth people: risk reduction programs, where the client gets home risk assessment and recommendations for improvement
Famous people’s stuff gets stolen often. Conterra wants to help people get ahead of the problem, and most don’t realize they can solve it.
They also offer international security management, offering expert planning and white-glove treatment for medical and diplomatic preparation and solution.
Zach is working to figure out if they are more like CarMax (which owns the entire client experience) or “B2B Uber” where security managers at companies use Conterra as a booking tool.
Most of the similar competitors were bought – companies pop up, they offer international, win contracts, then get bought by a large company like Securitas.
The main value of home threat assessments isn’t necessarily current profit, it is driving more business later.
During the last quarter, Zach spent too much time pursuing shiny objects. He has learned to be more conscious of his time.
Zach might not have much work-life balance now, but he thinks of it as a season that won’t last forever.
Staying healthy is critical, not only for the obvious personal reasons, but also because clients expect it of Zach.
Successful companies are willed into existence.
Zach has learned to hear advice but not necessarily to take a quick reaction to it.
Mental Models Zach learned in the military that carry over to entrepreneurship like “After-Action Reviews” and “Attention to Detail”
(Since we recorded, I hung with Zach at Capital Camp and he told me there’s been a ton more progress with large B2B clients, especially in the tech space.)
Learn more about Zach Marshall:
Additional episodes if you enjoyed:
Track Zach Marshall #2: Focusing on customers, building MVPs, and creating trust as a new startup.
Introducing "Track Zach" with Former Navy SEAL Zach Marshall
Episode Transcript:
Eric Jorgenson: As always, we should have started recording minutes ago because we always have a good time together.
Zach Marshall: Like the catch-up session we should record in the future.
Eric Jorgenson: Yeah. It's always part of the fun, and you have teased me with an overflowing bucket of updates from the last three or four months. So I'm really excited to get into it and see everything that's happened in your life and Conterra over the last couple of months. It was fun to go back and listen to the previous episodes and like gather all my curiosities and check out the year end update that you emailed to me like January maybe and just see everything that has changed. And that is exactly what we're trying to capture is how much changes in an early-stage startup like this.
Zach Marshall: A lot. So much.
Eric Jorgenson: All right. Do you remember, like how clear is your picture from where you were in January to where you are today? Like, are you just like mentally stretching time or are you kind of like it's really clear how far you've come and you're like, oh my God, look at the ground we covered in the last 4 months?
Zach Marshall: It's definitely clear we've covered an extreme amount of ground in the last 4 months. The good news is a lot of that's in the direction that I put in the letter, in the annual letter. It's like that is the direction we went, which is really great. I looked up some of the things that I said were the goals and we've moved on all of them, where I think the previous podcast, when it was like let's recap the goals, it was like, ah, well, we just kind of scrapped those and just picked new ones. So, that's good. We're definitely moving in the right direction, and I feel like we've- I mean, we're a 10X better company today than we were in January.
Eric Jorgenson: That's awesome. And in a hundred days, that is a lot to say. That is progress every day and every week to get something like that done. I'll try to recap the snapshot from December, January, which was you had a product that sort of the takeaways were: we built a car wheel instead of a skateboard. We learned that we have to get demand first because demand then brings on supply. This is a really low trust market, and we maybe need to pursue like Carfax CarMax kind of strategies to create that. But you felt like you had a really clear path of let me just keep talking to customers, let's find our beachhead, and bring on an operations person and sort of a shift from focus on building tech to focus on doing operations supported by tech where necessary, which is back to the skateboards. Is there anything you want to add to that snapshot or correct?
Zach Marshall: Yeah, I'll just add some details to it. So, for personnel, we did, we built software for 6 months and my original plan was 3 months. So, we already doubled the amount of time to get the first product out. That product was in the wrong direction. We were trying to do supply side first. So we're creating an onboarding platform for the labor side. Labor side didn't trust us enough once it was software instead of like personal relationship. And so, we were getting- we're really collecting nos come December timeframe. And the software had already taken a long time. It just wasn't meshing the way it needed to. And so, the first hard, first toughest decision at the company was having to let go the head of product, not because he wasn't performing but because that was just a skill set that we couldn't afford for the next season. So going into Q1 of this year, it was like, well, we're not building software internally. We can't pay the guy who builds the software internally. So many lessons learned there that we can dive into after I finish the snapshot. But after letting him go, the next step was, well, how do we collect demand side first? And what demand can we serve? And so, we picked a couple of products that we thought would work and started talking to customers. And when I say we, I brought on a director of operations, this guy Kurt coming out of the Department of State, hired him directly from the Department of State. He was a special agent there. I’m not exactly sure what I am not allowed to say on recording. But he worked with a bunch of agencies across the globe. He worked on diplomatic security. He helped build out security for some embassies in really dangerous places. So, this is a guy who really understands security at its finest. And he also was a former Army Special Forces sniper and a Baltimore County police officer. So, between all of that stuff, he was a great fit for a couple of reasons. One, you know this guy's a heavy hitter, a hard charger, excited dude. Two, he was excited enough about Conterra to leave a three-time multi-pronged career of the most stable paycheck in the world to come join us, which is working for the government. And the third bit is he kind of hit all of the labor markets that we hire from. So having been law enforcement, military, and then more direct government, that's pretty much where we're getting the vetted labor from. From high to low end, it's like we like the fact that in all three of those cases, the backgrounds have been vetted by other people. It's like just the same reason that you hire somebody who went to Harvard. It isn't because the education, maybe they got in, so Harvard said they're pretty good to go. It's like, well, they were in the government, so they probably don't steal things and have a bunch of other stuff. They have security clearance, whatever. So, these are probably people we can use for security roles. So that was one of the reasons I brought him on, and he's been a rock star, so that really helped fuel the growth we've had over the past few months. And we did, we switched over to complete demand side first, operations focused. The only thing that I've done for the software side is scope projects with really well recommended vendors. So, we kind of understand what we would build first, how we’d build some prototypes if we wanted to build them, we've also looked at how we're going to build our next prototype this following quarter coming up, which is going to be using Airtable, Zappier, Twilio, and APIs. And all of its backend stuff. None of it's front end with the client. It's all how we connect to the vendors on the labor side. It's been cool. We've shifted, man. We went from supply to demand, and it took two months to get- so we had to start with conversations and picking what product we were going to grow. And then those conversations turned into like more direct customer interviews. And then, I mean, it wasn't- really, it was last month that every customer interview I had, I had like seven in a row where at the end of the interview, they said, hey, I know you said you wouldn't sell us anything, but can we buy it? And that's a really good thing to hear. So, we've booked more clients than ever before, we've got four paying customers for May, and we expect that to continue to grow every single month. So, we went from 15K in revenue total to 25K in revenue for May. And I don't think that's going to slow down. I think we'll be looking at- I mean, our target now is 250K by the end of the year, which is a huge difference than what I expected in December, when I'm like, jeepers, we don't know what we're doing, we did everything wrong.
Eric Jorgenson: Yeah. Well, and starting that marketplace business is just you have different expectations for revenue and how it's going to go. And to your point, it takes time to build that pipeline. So, a few months to go from a standing start to a relatively full pipeline where customers are converting and you expect- you've got cash this month and you expect next month to be bigger. That's great. And you hope that snowball just kind of keeps going, especially once the referrals get kicked in.
Zach Marshall: And we're getting so many referrals. It's like I've had to shift my- we have a thing called prioritize and execute. Like it's a common military phrase. I've had to prioritize and execute on fundraising. So that's what I'm doing right now. I know I've teased fundraising. I think I even talked about it in the last podcast. I didn't really take it seriously. We've been completely customer-focused, and I've personally had to shift that in the past like two weeks to being just fundraiser focused, which is interesting because we're getting so many referrals. Like behind this screen, I have a whiteboard of names. I have a salesforce and everything too, but like I have a whiteboard of names that are like I need to be crossing off like three or four every day so that even when we do raise money, these customers are just lined up, like we're actually moving through them. But that's so much more exciting for me and motivating every day to be like, look, we're actually building a business here. We're building a company. And with this next- wrapping up our final pre-seed raise, which is right now, we're raising 200K, our goal with that is by this summer, we're going to convert 5 to 15 of our business clients or B2B clients and 25 private clients. And at that point, we'll be like, I don't know, we'll have everything we need to know in the market to actually build the software on the side that we want to build it on and to scale and grow it. I don’t know. It's cool. It's cool to have direction and have the problem be like resources. Like, oh, the lawyers aren't going as fast as we need them to, or, hey, I need two more people, but we don't have the cash yet, as opposed to not knowing what we're building.
Eric Jorgenson: Tell me what those customers are buying now. I know that the website has shifted a lot since the last time we talked and it's sort of really well merchandised now, and it looks like it's just sort of booking through to- just like introducing services and booking through to Calendly, which feels like a totally reasonable kind of early pipeline thing. It is very customer focused, demand focused, as you said.
Zach Marshall: It's demand focused. The website that you can see, which is conterrasecurity.com, is really just like one of the products that we brought to market. So, I'll talk about that first, which is high net worth and ultra-high net worth focused risk reduction programs. And so, what that means is the client is getting some kind of a risk assessment, so home threat assessment, a whole life threat assessment, where we're taking diplomatic security solutions and bringing that to the private side. And what's cool about that is we're actually using the people who've done diplomatic security for diplomats. And so, it's also cool because most people, even wealthy individuals, aren't going to like rebuild their entire house, they're not going to build an embassy, but they do need some added security to kind of hit table stakes or what we think is table stakes for a safe risk-free environment. We call it living worry-free. But that's the same thing with our diplomats overseas. You can't like rip down the chateau in France and build a new one because you're an ambassador or something. Instead, you have to add these layers of security in that are kind of invisible, but allow the principal to be protected. So, we're doing that and that's really what we've been selling. So, we've been selling that. We've also been selling some event security. And so, with event security, really in both cases, it's we are actually more of a consulting or value add reseller where we're connecting the client to integration partners who are the ones, let's say, putting anti shatter film on glass for someone's home or installing a new set of cameras, or one home we're putting in these really beautiful custom-built doors that latch a different way that allows them to prevent a six-year-old from breaking in, which was kind of what was possible before. And so, it's kind of like our little internal brokerage or marketplace for that thing, for that space. And then, the second or the upgrade product from that and what we're trying to sell, and we have a lot of deals kind of in the works, we haven't closed any yet, are the idea of like international security management. So, you sign up for- we have on the website, it's called Family Protect Plan, which is where we do a whole life risk assessment across your family, including your kids and anybody in that circle. And then anytime someone travels overseas, anytime they're in some kind of a risk situation, you've got expert counsel from us, but we're also going to actually white glove manage a security solution. So, if you go to Mexico and you fit inside of our category, we're probably not going to let you go, or at least we're going to tell you not to unless we put a couple of things in place. And then for that part of the business model, the retainer or the subscription is for Conterra’s consulting. It's not for the actual end like person on the ground. And so that's going to be like a cost plus situation where we find you the vendor, we manage the vendor, we make sure they show up, and all those kinds of things. We replace them if they're not what you expected or they treat you poorly, et cetera. But we're just going to invoice that to you and then add a small percentage of overhead. So, yeah, those are the two products on the website really. We also have quite a few special projects going and the business side, like the B2B side is more, we've got- These are the bigger contracts. Like we have one in the works, it's anywhere between $3 and 9 million contract for a multi-year period with a top tech company in the valley. If that closes, on the surface, it will look like a regular security contract. We have to be licensed in California to take the contract because we have to be able to hold the liability as part of the deal and so on. But internally, we're going to be staffing and running the project a lot differently than what our competitors would. First, we're not going after the same size margins. Second, we're going to be using our prototype software to be able to- for any of the contingent work, which is every time the executives travel outside California or outside the country or go to events, we're going to be kind of like internally gig staffing all those things. And then same thing with the vendors. Now, it's going to be with a very small pool of vendors and people. These are people that we trust to treat our customer really well. In other words, they might as well be W2's or they might as well be on our team. But the idea is that that's the way we can prototype it. And we've been having conversations with these bigger companies. And one of the things that I learned is that getting a large corporation onto this platform is very different than getting a private individual. I mean, we know that, but the big difference is that if the product they're paying for is over a 100K, it's going to take a really long time before their boss is going to let them buy that with a credit card and no RFP process, which is what we want to get to. We want to get to the point where you could say like Conterra is the RFP process, because they've already have all these reviews and you choose the one that makes the most sense, but because that doesn't exist yet, this is a new way to buy, pretty much we can only, or I expect we'll only have like more of an open marketplace style tool for those security managers for purchases under a 100K. So, that's like one that I just heard was an executive that purchased a type of psychographic assessment. He purchased like seven of them at once, or ten of them at once. They were like 7,500 a piece. So it's like 75 grand. He could have bought that through the platform. He could have been connected to that vendor and bought it through the platform with a credit card. But if that same client wanted to go run a multi-year executive protection project and the actual owner of that project is going to have to be an RFP contract. And so, we're competing to win some of those contracts as well, which will allow us to, one, get some name brand customers, two, bring in a whole lot more revenue, but three, I think it's going to let us kind of eat our own dog food, like see if the tool actually is that much better than what currently exists.
Eric Jorgenson: It's really interesting to see where you fit into- where you're either forced or choose to kind of fit into existing processes and structure versus where you're like this is a place that we can innovate and find margin and use technology. The example that came to mind for me was like early days of Opendoor, the customer would go book on the website and like reserve a table. Sorry, not Opendoor, OpenTable, would like reserve a table, make a reservation at a restaurant. And then OpenTable on the back end would like fax them a reservation because that was how restaurants like took in reservations. Like that was their system. And it was OpenTable’s responsibility to bridge that gap while they were building the marketplace and then slowly accrue sort of the market power and reputation to replace more and more things with technology and like claw that margin back inside the company. It was really interesting. It kind of sounds like the same thing. You have to go compete and win a contract in a very traditional RFP process, then use your own marketplace internally. And that helps you build up that vendor supply side of things and build trusted relationships and inventory on that side. And then you'll just kind of slowly shrink the manual steps in between, and then there's a marketplace.
Zach Marshall: I mean, that's right on. And I think what we'll find, what we need to know by the end of the series seed, so let's say we- so to tell a whole fundraising story, right now, the way I look at it is 200K gets me, depending on how we roll, it adds an additional 5 to 8 months of runway. And with that, the goal is those 5 business customers and 25 consumer customers bringing in somewhere around 250K of revenue for this year. But all of that isn't the kind of traction or learnings that we need to understand what type of marketplace this is at the end. But with the next round, which we'd want to raise at the end of this year, let's call it like 1.5, 2.5 million, that capital has to teach us whether or not we're CarMax or Uber. CarMax is we own the entire client experience, and then we fulfill it with vetted stuff and connecting all these different dots. They have regulatory capture because they run all of your- they literally hand you an envelope with like all the stuff so that you can register your car right.
Eric Jorgenson: They become your limited power of attorney with- It's awesome actually.
Zach Marshall: They take it all over. So, are we that? Or are we like a B2B version of Uber where security managers at companies are using us as a tool to book all their stuff? We might be both. I don't know. But I think right now, the OpenTable example is perfect because we really are. We're going to be like, look, we get this big contract. We have to run part of it like a regular security company. But then the rest of it, every time we travel, it's like, cool, we're going to 60 countries over the next two years. Well, we're going to have a gig marketplace in 60 countries by the time we're done because we had to vet five different vendors for each of those places and then choose one. And then, we're going to- I mean, those vendors want to make money. We're going to make them make the money through the platform. We were like, sure, we'll pay you. The invoice is on here. You’ve got to download the app.
Eric Jorgenson: I think last time you talked about some of the other marketplaces, vertical specific marketplaces, labor marketplaces, or staffing agencies that you looked at. Do you know what their sort of bootstrapping process was, like how they grew into the actual marketplace model? Is it similar to what you're doing here or are the dynamics of those industries different?
Zach Marshall: So, I mean, every industry is certainly different. I'm sure we're also more the same than we think we are too. And I don't know that I can speak to them well. I would say that from the outside looking in with RigUp, it definitely felt like more of an open marketplace, but then it closed, so it was like the opposite direction. RigUp being the marketplace for oil and gas drilling professionals. It's like, it seems like how it started was get a profile on here and then we're just going to get you through the door or whatever. Now, it feels a whole lot more like a we get you a job, so you just need to maintain your profile on here, and the only people that are actually looking at it are our internal staff and some kind of an automated thing. And then we are a direct staffing organization. And I was actually talking to Kurt the other day. I was like I'm not even sure RigUp – and somebody from RigUp, please give me a call, I would love to talk about it – I can't tell if the end client ever does the work themselves, or if RigUp actually ends up providing the whole project. And I don't know. And I think we're going to find that we're in the same situation. It's like some companies are going to want like a vendor on premises that manages everything. Other companies are already going to have somebody who does that. And they're just going to want to be able to get the little a la cart things that they want.
Eric Jorgenson: Yeah, definitely different kinds of customers, if they already have people in house managing security, if it's a one-off event, if it's a private individual. So how did you align on these two sort of like the home security audit and the family protection as the right spearheads, the right first products to offer?
Zach Marshall: So first I'll talk about why consumer first or retail first instead of business first. And that was because that's kind of the foundation there is sales cycle. I just knew from my experience doing enterprise sales at Acrete AI, that I was like, look, if we only have this much runway, it's January and we're going to run out of money, we need traction and a bunch of conversations with, it doesn't matter what company it is, aren't enough for me. It wasn't foundational enough for me to learn anything or to get it closed. Consumers, man, they'll tell you exactly what they think right away, even before they buy it. Like I learned so much from all the customer interviews we've done since January. So, then we looked at it and went well, what is going to help us build a top tier brand so we can charge more, and so that we have the ability to move into the business, the B2B side. So, it was like, well, what's a product that we can charge a lot for? So, who has a budget? And then the second piece was what's something that we can be the best at right from the beginning and like actually compete in the market. We're not like faking it till we make it. Like, we've got it handled. And so, the people with the budget for security in the private sector are only wealthy people. And so that was step one. Okay, so we're going to serve wealthy individuals. Now definition of wealth could be anywhere.
Eric Jorgenson: Yeah, I was going to ask where does that start? Where does the security concern I guess start as a wealth level?
Zach Marshall: Let's actually put a pin in that for one second because I'll dive into it. I want to finish the other side. So, we picked the market we thought was right, which is these people that are high enough value that security is something they'll pay for. And then the second was something that we can be the best at. And having Kurt just join the team and I had done a home threat assessment in the past and so on, like there was a profit margin there. I was like, man, talk about good timing. This is a guy connected directly to diplomatic security that like professionally does home threat assessments and risk assessments at buildings. And he's been phenomenal at helping build out that product and using his network and expertise to build that even better. I mean, we've taken the assessments we've done so far to like people who are really doing this work other places and their review has been like you guys are nailing it. Like, it couldn't be more than this. And so, it's good to have a product that's like the best in that space. And then, the subscription side to it, that actually came from a client; that was me talking to somebody, a high-end or a high-net-worth individual who was like, hey, rather than me like just paying you for this one-off thing and maybe securing my house, it's like I actually have a lot more concern when I travel. Like what if I just paid like some subscription, and then, anytime there's a problem, I can call you, if I'm stuck on the border in Mexico, I can call you. So, you're always on the phone. And then, he actually said, I know a lot of these wealthy people, whatever, nobody has like a phone number they can call to solve, like to fix these problems. And I was like, well, we can do that. We have a network of fixers.
Eric Jorgenson: I think you've described this to me. I think we talked offline in January or February or something. And you were kind of like describing this, like you called it NetJets for private security that's like, this is your phone number, this is your- we'll give you a travel plan. And then we're basically like fixers. Like, did you have an altercation with like local police in a foreign country? Do you end up in jail? Did you get kidnapped? Like all of this stuff that is just like you worry about it, but then you're kind of like I actually don't know how to de-risk that, so fuck it, I guess.
Zach Marshall: If you get a DUI in the US and you're one of these wealthy individuals, like you already have a lawyer that you're going to call, literally you'd know the name. You probably have done a bunch of other things. Mr. Lawyer, this is what just happened, help me out. What's my first step right now, before I even get out of the car? And they'll tell you. And we want to be that for security problems.
Eric Jorgenson: Which is interesting. Like, I didn't even know that that was a thing that money could buy, frankly. Like, I didn't know that if you have somebody like you or Kurt in your corner, that there's somebody that you can call who can call the state department, who can like mobilize the United States to protect you no matter where you are in the world. Like that is the most baller shit I've ever heard, and I didn't even know that money could buy it.
Zach Marshall: Which is funny because it's very qualitative. It's hard to measure what it really is because what it is actually is a very strong network of relationships because until we're much bigger, until we have a footprint where we actually have an office in every country or whatever, the way we're solving these problems is through the consulates, it's through the embassies, it’s through the regional officers in all these places that we can get directly connected, that we have relationships with. We're also involved in some programs where we get intelligence from some of these organizations as well. So, we're like really tied into that space, which allows us to solve those problems. I will say that I've found competitors along the way. And there are definitely other groups that are doing this, that have done it. And it's interesting that most of them that I've found first have all been bought. It's like these companies pop up, they're this international like solve your security problem sort of thing, and then two years later, they get bought by Securitas or by G4S or somebody. But yeah, I mean, I think it's a cool product, and we'd love to have a couple more customers, but the home threat assessment side is just, it's kind of the first marketing tool for that. It's like you’re working with these people, helping them solve their- the way that I describe it is your home is your castle, everybody says that, but most houses, even expensive ones, are so poorly protected that a teenager can break in in moments. And so, step one is to get your home to like table stakes. Like how do we make it so that your doors are locked and they can't just be kicked in? How do we make it so that when someone hits the glass of your patio, the alarm is already going off? So, their timeline is already ticking and they can't get in. So, three minutes later, they leave rather than intruding in your home. That seems to be the first step. And then from there, we've had quite a few good conversations about travel security, like vacation security and those kinds of things. And when I say security, what I mean is more guidance than anything else. The majority of places people go, they don't need a security guard unless they are a certain type of person. Going back to your other question, they do need to know where not to be. They do need to know where the English-speaking doctors are. They should have a partner for medical concierge and for crisis management if they have to get evacuated or if anything goes down or goes wrong, and that we can provide. We can provide that today just about anywhere in the world. Bringing it all the way back, that's why the two products. We knew we could do both products really, really well. We can do it right now. We can serve the customers premium class, and they have the budgets to pay for it.
Eric Jorgenson: Budgets, short sales cycle, they both have the potential to be purchasing the same products, generates revenue. Do you have your eyes on- I mean, I was just kind of doing the napkin math here as you were talking, and I was like, do you have your eyes on reaching sort of enough revenue that you're sustainable or are you- but you're also talking about fundraises? Like, are you trying to reach breakeven on these services and then sort of like reassess?
Zach Marshall: Yeah, it's taking a multi-billion-dollar vision, because we're talking about a $50 billion industry with a 70% rake, so $36 billion, 40% of that is taken by no value add middlemen, conglomerates that just subcontract. So that right there is, what, 21 billion. So, if we reduce that 40% rake to 10 to 25%, we're talking about 5 to 15 billion in revenue. So, that's a good target that we want to get. We'll never get to 15 billion in revenue doing home threat assessments. It's an incredible marketing tool that doesn't mean we can't be capital efficient with that business line. And so, we definitely want that to be a profitable, at least break even, but hopefully a profitable business center, and we expect that it's going to drive a ton of our business for a long time. I mean, it's already driven the B2B side because every single person we're talking to on the consumer side owns a business or is an executive at a business. I've done the math on it too. And it's like even if we- let's say we- so we enter this market at like the 10 to 20K target for a home threat assessment, that pricing is likely off. We found that just for the assessment, just for this report, 10 or 20K is really high compared to other similar services that these customers are paying for. Other similar services, you might think of like physically, it would be like getting your audio installed in your house or getting the electric blinds put in, different interior design stuff. And so, us coming in and being like, look, we want to add- we're going to add this new thing that you never heard of before, and we're going to add it into your home build, and we're going to charge more than all your other vendors are charging for their service was a little bit off. The difference there being that if we're also providing integration support, meaning we work with their estate managers, we work with their general contractors and so on to coach them to fix the problems that we've recommended. And then we go back out and visit the homes or whatever, and we kind of audit it along the way, we see another high margin short-term project there. And then hopefully we convert them to some kind of subscription security concierge service. Which is we're pulling onto. But I guess coming full circle to can this be like a profitable, strong business on its own gets back to your first, your earlier question, which is like how much money do you have to have? Like how much money does somebody have to have to pay for this service? I would say we're targeting people with non-primary homes. So, vacation homes, best if they've got five, okay if they've got one. You've got to have quite a bit of cash to go buy a second house in a place like Malibu or Miami. So, that market is what it is. That's a great market for the travel security thing. These are all people who are also spending a lot of money going overseas. They're paying $30,000 down payments for a trip to Alaska. They're paying- they're already spending money on that. So, what's another grand to make sure that that trip has some kind of evacuation insurance and [inaudible 31:14] insurance, and you've got some guidance, and then we can build a little profit margin in there. But for the home threat assessment itself, if we want to grow that, we have to charge less. Let's say we're targeting 5 grand. We're marketing it really well. We're going after the 208,000 million dollar plus homes sold every year, that could turn into a real business. If we got to the point where our assessors were regional. So, let's say we have- you're no longer going to get a secret service guy to your house, but maybe you've got the secret service guy is the one who audits the report afterward and makes the recommendations. The person at your house is going to be somebody who's like 1099 wearing a Conterra polo and has been trained well, probably a veteran or law enforcement veteran, but maybe not a top tier person, they're going to come to your house. They'll be there for 5, 6 hours. If we got to the point where, I mean, $5,000 times, what, 10,000 homes a year is a $50 million business. So, that is cool. The challenge I see with it is getting there is a very long bootstrap story. Like every way I've built it, it's like, man, how do we get to four? How do we get to eight? How do we get to 25? How do we bridge the gap between hiring people so that they're ready to do it? I mean, we just did one in Malibu and it ended up costing us a ton because it was like right away, two flights from different states, hotels, car, all that, and then doing the assessment. I added in a bunch of other business stuff while I was there, but it was like jeepers, we got to make at least 20% on this. And I was just imagining, like if we had to do 20 of those in a month. I was like, holy crap, that would be a lot of work. So, the unit economics require scale for that to be a business.
Eric Jorgenson: And there's plenty. I mean, you've got opportunities to reinvest in technology and streamline process, as you said, and then- What's interesting to me about this story so far is that we are still like- Bezos says this thing, like stubborn on the vision, flexible on the details, which I'm sure you've heard before. You're already smiling at me, which I love. Like we will build a $5 to $15 billion a year marketplace that removes the fat cat, poorly run middlemen that's just a garbage process and cruft and mess in this legacy industry. But I'm going to try anything that we have to do in order to establish all those beachheads and get those wedges in and keep expanding and keep building the vendor side and the brand and the relationships and the customer trust into that. And I mean, you can stack up a few. If you have one, the home audit, security audit is one profitable-ish or break even business line, but it's still accruing value to that fundamental marketplace behind it, you can keep starting new versions of that. And over and over again, each of those processes accrue, and you're just building this giant snowball marketplace behind it. And it's hard to do both of those things at once, but the prize for doing it is huge.
Zach Marshall: Yeah. I mean, I didn't say it before, but the other thing that all of these products have in common is that by the time the product is fully delivered, we've worked with multiple vendors and people. Meaning we had one client that we had to connect to a bunch of different service providers. That's the marketplace. So, home threat assessment, we're now working with like seven different companies for different integration things for that fix, to bring the security table-stakes. For travel security management, we've got partners in Africa, partners in Latin America and in Mexico, in Europe. Like every single transaction we have with every single one of those vendors is building our relationship as a connector. And so that's even cooler. So, if every product we deliver ends up being one that connects one side of the market, the demand side, to all these different suppliers, we're just like manually building a market. And it's cool too because I think it's an expanding one. Especially in the high net worth side, I think we're going to expand the security market. Most people in the “I bought a million-dollar house category, but I'm not a 10 plus millionaire” don't realize or don't think they can get access to a top tier security design plan for their home for a couple grand, 5 grand. I think that's a new market. I think we get in there. It's like people are paying a thousand bucks to ADT to have somebody literally come to their house with a bunch of gear and be like, well, what do you want? I want cameras. Okay. Well, where do you want them? I don't know. Isn't that what you're supposed to tell me? Like, oh, we'll put up three just to make you feel better. Like having that thing, I think we'll expand that market and along the way, I mean, we're talking about going into three markets right now, but let's say we get to 50 states. I mean, we’ll have thousands of vendors that we’re bringing business, that were just directly bringing business to them. That's how we get to that point where you no longer need to hire a massive contract with a global security vendor. Instead, you'll be able to go right to the small, medium business that actually does the work, and you'll save a ton of cash. So higher quality, better experience, lower price. I mean, that's how you make money out of nothing.
Eric Jorgenson: And so inside the company, like what do the operations look like now that this is kind of the primary focus on the demand side? You've got Kurt in there. You're worried about fundraising or working on fundraising now, primarily like, how has the process evolved now that you've kind of got a to pipeline of these manage? You said you’re in three markets it sounds like.
Zach Marshall: Yeah. So, we want to build three markets. We're in like seven markets because we're just taking whatever deal. And right now, we're flying. The idea is that by the end of the summer, first of all, I won't be on any assessments anymore. And I don't know if I'll ever be on another one again, I probably will be, but also, we hope to hire a local person in each of those three markets who can cover the majority of the assessments this year, but they'll be able to manage 1099s to start scaling that. They'll start as the regional assessor, but they'll become the regional manager. So that's how that little business is going to build. Operation side, really it's split in half between like admin sales and fundraising is me and kind of the backend of each opportunity we have, it's Kurt doing the due diligence on how we're getting it done, whether that's for a large EP contract, executive protection contract, or it's another threat assessment somewhere. And then the threat assessments themselves, he's the one that's jamming on the keyboard and working with other 1099s and people in his circle to make sure that each assessment is done all the way to the highest quality. That's how it is now. Honestly, I think these next 5 months, we're going to be wearing a lot of hats, of course, but we're not going to get to hand them to anybody. I don't want to add more W2 payroll until- especially inside like one of those little businesses- a little business, it could be a 50 million dollar business, that's not little. But I'm not going to W2 somebody into that until that's literally something that can pay for itself. Like that's the, like what I said earlier, that's the careful capital allocation to grow out that business. Where, maybe at the end of the summer, we might hire somebody who can still serve across different categories inside of our company for, I guess, whatever project we're working on. And I don't expect to really grow the team until seed round, until the end of the year.
Eric Jorgenson: How's the Launch NY experience? It’s a little accelerator incubator thing you went through the last couple of months. Or has that not started yet?
Zach Marshall: No, it has started. So Launch NY is a program that New York state funds, and I might get it wrong, but you can go to launchnewyork.org to see the details, but it's a really cool organization. They've got like a grant or government kind of funded seed investing thing. And then they've also have a private investor group that then tries to like double that amount and come in to help support your early raise, something between like 50 to 200K worth of cash or something. But what they've done really well is they built a strong network of, they call them EIRs, like entrepreneurs in residence, but I compare them- I mean, they're mentors, So like Mike Bovalino who's my mentor there was like the best outcome of joining Launch NY is having this guy who's been an executive at multi-billion-dollar companies, he's gone through the gamut of a strong career, and instantly having a mentor that gives me time is great. Not only that, but Launch NY pays their mentors for consulting time as well. So, if I want to actually dive into something and book a real consulting session with him or with somebody else, they cover that. So, it's a cool piece of like support. Yeah, I've been in kind of startup community, builder scene now, ever since I left San Francisco, and I've met with so many people, and it really seems like Launch NY is doing something pretty well. They've got a strong portfolio. They have I think at least one or two Western New York unicorns in their portfolio. Every other organization, don't kill me here, but I don't know that I've seen another government funded organization that's actually had such a cool impact.
Eric Jorgenson: I’d say it is hit or miss on some of the public startup focused stuff, bureaucrats running them. Yeah. I'll list a few too, but it's yeah. Hit or miss; let's call it hit or miss generously.
Zach Marshall: Yeah. I would definitely recommend anybody in Western New York to apply for Launch NY if you've got a company that can make more than 10 million. I think their minimum is you're targeting at least a $10 million business in 7 years. So, you don't have to have a billion-dollar idea, but you've got to be building something that can grow to a full team. It's not like a one person consulting company.
Eric Jorgenson: Got it, okay. Another one of the bullets you dropped me here in prep was spent a little too much time on shiny object deals. What were the shiny objects? I think this is a perennial challenge in especially this like early ambiguity thing where you're like, ooh, revenue potential. Yeah, it's hard to resist going down those rabbit holes.
Zach Marshall: So, I think I would qualify that bullet a little bit, which is it's not that I went for some shiny objects, it's that I spent too much time on them. I know that's what I said, but there's a key there, which is some of those shiny objects are turning into deals. The problem was if I spent two weeks and all I thought about, talked about, riffed about, our 15-minute standup turned into an hour of ideating on some shiny object. So, one we're working on is two billionaires who are buying this massive airplane that's been converted into like a live in four-bedroom suite, air force one style aircraft to go travel the world and visit all these different countries over the next couple of years. I was like, man, this is it. This is like a $1 to $2 million a year deal to do executive protection for these people. We're going to get to work with vendors in all these different countries. It's going to help build the marketplace side. Like, man, this is it. But that sales cycle, I mean, we've pretty much won, but there's a thousand things that slow down billionaire adventures, like their businesses, like the war in Ukraine actually confiscated the airplane, so now they’ve got to buy another airplane, like all this. They're not Russians, but there was like a title problem with a Russian oligarch. And so, all these things got in the way. And when I looked back, I was like, man, I could probably have fit into 3 hours all the actual work I put in on that project, maybe 10, because I went to some consultants and friends and we built out like how we would do the project and so on. But man, did I waste a lot of time ideating and talking and dreaming about it because of that revenue perspective. And I think that's been the case with a lot of the B2B deals and what we learned, and it's been going well, we just had one walk in the door that's the largest deal we could have. I mean, it's like a $9 to $12 million deal. It would close this fall. We’re like being coached through it. But fortunately, I've had enough of those not pan out in the past 4 months or whatever that I'm like I'm just doing it professionally and correctly the same way that I did when I didn't own the company at Acrete. And being like we just put it through the process. We don't have a sales playbook, but I know a general enterprise sales playbook. We're going to work that. We get to a certain point along the way we may hire a consultant or two to help us really lock down on pricing and make sure the proposals are beautiful the way they need to be. But like I can't just every day think about it. Like, if I think about that, it's like everything else wouldn't be important because you'd be like, wow, $12 million. Who cares about that other, that home threat assessment? It's like, well, the vision is all this other stuff that we're trying to build. And yeah, that's the shiny object problem, especially with enterprise sales, man. How many founders have all of us talked to, they're like, bro, we got 20 million in pipeline? Well good, keep talking about it. Like what are you delivering, what are you building, et cetera.
Eric Jorgenson: It's two $10 million deals that like the odds that you actually win them, like the expected value of the pipeline is like 20K because it's a 1% chance at $20 million, which is definitely different.
Zach Marshall: That's exactly- what I've been doing in like my salesforce model is like rounding down the expected cash to the lowest I think is possible for us to accept the deal. So not what we think it's going to be, but like what's the lowest we would do the deal for. And then we've got our stages built out. So, the percentages don't go up very fast. They just don't. They don't go up fast enough until signatures are on a piece of paper. I think we're still at- we're at like 20% until after we have like an LOI and we've established a multi-person champion team inside the company. And so, you're like that- a lot of salesforce models will put that at like 70%. I'm like, yeah, I don't think so. We're a brand new company. There's like a thousand reasons that somebody would walk in the room or past the glass door and be like, hey, go with that other company and we’ll be like, oh, well, shit.
Eric Jorgenson: Yeah, it's really interesting that- there's a good nuance of it's not that you shouldn't have done it, it's that it could have been more efficiently done, I suppose.
Zach Marshall: I mean, a hundred percent. When you're a two person team with some 1099s around and everything comes down- what I should have been doing during that time, I should have taken half of the time I spent on that on building more relationships with the people that I'm raising money from. Because I already know what my actual- my priorities are I need to be able to pay payroll and I need to sell deals. It's like, well, if I put all my time in selling deals that are going to take 18 months, like I said, that was the consumer versus business side, like I don't get to pay payroll with those deals for another year, so I got to raise money.
Eric Jorgenson: Interesting. Is there anything else you want to cover, I mean, at the business level or strategy level? It sounds like no big change on the vision, only kind of refinements on the approach. We talked about the sales pipeline. We talked about the team. I want to do like a little bit on more personally on like you and your experience and your work habits and stuff like that. I don't know. Maybe let's wrap up with like- or the fundraise, do you want to talk about the fundraise process so far before we put a cap on sort of the business chapter?
Zach Marshall: Yeah. I'll kind of summarize all of like how I feel as a business into the fundraise right now, which is our business is in 10X better shape than it was in January. Like us pivoting to demand side first was very- it was another gamble, but it worked. And now we know when we collect demand, vendors are talking to me, labor talks to me. I have like 27 resumes for the aircraft thing in a very short period of time. And these aren't joke resumes. These are like some of the best people in the world to go do that stuff. Like the supply just came, and so demand was right.
Eric Jorgenson: Small note for anybody who either didn't listen to the second episode or doesn't remember it is that like when we last looked at this, we were like, oh shit, we cannot accrue supply without a present contract and demand to attach them. So, you couldn't add supply to this market without the presence of demand. So, realizing that and shifting to demand first and seeing that supply really does appear when you have the demand is a huge, huge unlock, counterintuitive to what we expected in the first episode and what the strategy was in Q4. So, that is a huge, like proof positive and sort of like earned secret, I think.
Zach Marshall: Yeah. And there's more nuance that's probably not worth filling up now, but I've also learned a lot about like, I think testimonials and brands and logos and other ways to build the trust I need with labor who's a very specific type of- I'm not trying to put everybody in the labor side into one basket, but there's a couple of characteristics that kind of go across the board and there's different ways to get over that. And I think we've figured out what most of those are. So, that's a lot around the type of demand we're trying to bring in. So that was the big decision. And then from there, it's kind of just worked, maybe a tiny bit slower than I'd hope for. Maybe I would've wanted eight customers two weeks ago or two months ago instead of two weeks ago, but like it happened. And so now, we're at the point where we really did. We went demand side first. We took some time to figure out which product we wanted to do. We took some time to build that out and talk to tons of people about it. And then we finally started saying, yes, we'll do it. We started doing it. Each of those has turned into more. Like every single home threat assessment turns into another home threat assessment. And that's allowed me to build the confidence and the kind of testimonials needed to get the B2B conversations started because even though I'm not focused on them now, I still want them to close in a year. Like that requires the whole length. I don't want to wait forever. So, it's kind of like I feel all the traction has finally come together. We actually should have 5 moving B2B clients and 25 to- I keep saying 25, I'm trying to under sell it. It's very possible it could be up to like 50 of these private individuals. I think that, honestly, I think it's going to be limited by what we can handle, not how many customers want to buy the home threat assessment product, which is cool. So, all of that traction is wonderful, but we have to pay payroll. And that's where I think my one mistake was just the timeline. Like I just felt so strong coming in, raising the first 300K was really easy. And so I just dove right into the customer side. We pivoted, we found the traction, and I expect this fundraise to be really easy as well. But like I have to execute on it, like right now. So, my focus has really shifted to fundraising so that we do have the cash we need to actually serve all those customers over the next 6, 7 months. So, we're raising 200K now, which will be the last money we raise inside of a pre-seed round. We're keeping it on a safe agreement. We're keeping it with the same terms that we raised the last 30K in January on. And we just opened it up this past Monday. I've been sending out new decks, sending out new exec summaries. So, I'm excited for it. I mean, I'd love to close it in a couple of weeks. It would make it a whole lot easier for me to get back to work. But right now, it's kind of like I owe my director of ops his salary, I owe my wife a little bit of stability. So, I really have shifted my focus for right now is telling the story, hey, we've got the traction now. It's like first it was a dream and a vision, and we did it wrong. And then we shifted and now we've learned something and it's working. So, let's raise the capital needed, so that come September, August, we actually have the business that deserves $2 million or more to scale into 2023. So that's where we.
Eric Jorgenson: Yeah, interesting. So use of funds on the pre-seed is like payroll for another 6 to 9 months to basically close all these, basically the sales pipeline, get the cash in the door, probably it sounds like some sort of process optimization and maybe some of the technology stuff that you scoped out, but really like set up for the seed round, which would be much more of the use of funds around like technology and sales infrastructure.
Zach Marshall: I think the KPIs for the seed are going to be where we are on paper with business clients that are larger deals, where we are in revenue on customer- on private clients and like how we've actually developed regions. I think a really good bonus point there would be if we got region specific enough over the next like four or five weeks that we actually could hire somebody that pays for themselves in Miami or in Malibu. And it would free up a lot of time for Kurt, which would be awesome. And then the- but again, we're only going to do that if it pays for itself. The third thing that I do think is important is showing that we can build a no code prototype and be using it for the vendor side. So that's also something that we're going to have fit into these next 6 to 9 months. And we may use some consultants to help us with that. I've been building some stuff myself, which is, I mean, honestly, Airtable is pretty straightforward. It's not like we're doing something crazy here. What we're doing is like keeping track of vendors, keeping track of reviews of invoices and documents. And then, we want to kind of patch it all together with Stripe so that we're actually processing the payment part through an app, through a Conterra app, even if the only users are the actual current customers or current vendors.
Eric Jorgenson: Which is awesome. I mean, your vision and your year end review thing was our top priority for 2022 is to establish repeatable transactions enabled by technology. And that's it in a nutshell.
Zach Marshall: That's what we're going to do.
Eric Jorgenson: I'm going to say something stupid, which is that you need to some nutcase to kidnap Paris Hilton's dog and kickoff like a whole epidemic of fear about personal safety of celebrities and billionaires.
Zach Marshall: All you have to do is read page six. I mean, there's like an intrusion or the Beckhams’ home just got broken into. I mean, honestly, this stuff happens all the time. My investors are always sending me famous people who stuff's getting stolen or whatever. What we really need is just to- we need to get in front of people so they realize they can solve the problem. I think most people don't realize they can solve it.
Eric Jorgenson: Let's do some Zach level stuff. One the other bullets you said in here was entrepreneurship is really hard, like surprisingly really hard, which coming from a man who's had a 10-year career as a Navy Seal says something. So, I'm curious what's behind that subtle little bullet point.
Zach Marshall: Yeah. So, I think the big shift between- so there's different types of hard. And I think there was an uncomfortableness in the unknown for the first 7 months out of the last 10 months where it was hard, not because of all the work I was doing or the time it took, but because it was like what am I doing? Every 3 weeks, we're learning from more customers that what we were doing was wrong or that, hey, even if we did that, the unit economics wouldn't get us where we need to be, et cetera. So, that was one type of hard. When I sent you that bullet and I think where I am now is it's like hard, but it's good. It's this the hard thing about hard things idea where we don't have the answers, but we have direction on everything we're doing and we see the outcomes, but man, is there a lot of stuff to do, and there's no shortcut. There are zero shortcuts. There's no like, oh, get somebody to start doing your LinkedIn outreach or hey, get somebody in another country to start making your phone calls. It's like, no, right now every single phone call is me because they need my voice and my ability to have the authority to shift the conversation where it goes in the company. Every single assessment has to be done really, really well every time. There's no space for it not to be because we're growing referral-based and these are super- these are customers that expect really high-end things, which is the downside of the market we entered. When you enter at the top, like they expect the best. And then add in the fact that, I do have four kids. One is now 7 months old, born September 24th, the last- or one of the podcast dates.
Eric Jorgenson: The very first episode is the date your daughter was born.
Zach Marshall: Yeah, see you later, I got to go, baby being born. So we've got that, the 7 month old isn't sleeping right now, so she's going through that phase and we know the phase, we've been through all this before. But that means I'm not sleeping. And I'm still pulling, I mean, Monday was an 18 hour day specifically where there's just things that they got to get done. And so I think the hard part is that it's a grind that it's not like there's a light at the end of the- oh, it's almost Friday, I'll just take it easy. It's like, no. I mean, my kids love that I took Sunday off because it was Easter and they were psyched. And you might say oh, Zach, you don’t have any work-life balance. It's like, well, this is a season. It's not a forever season. Don't get me wrong. Like I heard, or no, I read, I think it's Andrew Chen, who is at Uber, talk about like those founders and how they're like in a war room every day against Lyft. And it's just, it's nonstop. It was always nonstop, it continued to be. I don't know what this thing will turn into. Maybe it'll be that. But right now, it's just really hard. It's hard to balance the amount of different tasks in the company, add on family, and then add on personal things, like being in shape and staying fit. It's like one it's healthy for me, but two, my investors and clients expect me to be healthy, like just based on the fact that I was a Navy Seal and that I'm providing this type of work. Like they want to see somebody who is healthy. Yeah, I don't know.
Eric Jorgenson: And that's just part of the long-term nature of it. Like this is a marathon. If you burn yourself out and make yourself unhealthy, that's going to come back to bite you maybe at the time when you can least afford for it to. So, I think that's always- it is a good way to force yourself into the meditation of the long-term nature of what you're doing. Like, it feels like sprinting a marathon, but like taking the time to eat healthy, workout, stay active, stay sane pays off because this is a long game.
Zach Marshall: Yeah. You saying that made me think that part of entrepreneurship being hard is once you get into the thick of it, and I would say just now I'm really in the thick of it, even my time off I have to do well. I need to make sure that I'm resting well because if I take a break and I don't rest well, and I drink too much or I do something else, then it makes the next 24 hours that much harder and each thing that much harder. And I've been on the phone call, it doesn't happen often, but I've been on the phone call where I didn't have my energy, and so I knew that it was flopping as it was happening. And it's like, well, this company isn't going to make it if I'm flopping on a call with a partner or with an investor or whoever, because you never know which one of those is going to be your deal, is going to be the- And so, yeah, the hard thing about this is all of it. Like everything, it's the unknown, it's the work-life balance. It's the amount of effort. The other side though is it's really rewarding. It's exciting. It's cool like how much we've gained in this 10 months. I mean, oh my goodness, are we- have I learned so much, are we so much better off. Like, dude, it's a whole nother world, and that's really cool and it's exciting to see how all that's happening. My kids are getting used to it and the fact that like I am still finding ways to dad every day, but they're seeing how hard I'm working and they're cool. Like they'll- we pray at dinner every day, and my son will like pray for Conterra, like, oh, I hope dad's company does really well and blah, blah, blah. And you're like, oh, hey buddy, thanks. It's cool. And hard.
Eric Jorgenson: That's really cool. Yeah, I mean, the closer you get to the CEO of a startup and the more honest they are with you about how hard the thing is that they're going through. And that's what's really interesting, like CEOs are rarely straight up full, maximum honest with their employees. They sometimes can't be. And sometimes it's the best thing to just keep a stiff upper lip and like stare straight ahead, hands on the wheel, like go through it. And the closer you get and the more honest you get, the more you realize how inhumanly hard that job is and how much stress there is to it and how much ambiguity there is to it and how much just mental and emotional weight sits uniquely like founder CEOs who are raising money and hiring people and selling and like doing all of this stuff at once. So, there's not a lot of people that appreciate it and there's not a lot of people that understand. Like when you look at cap tables and some people are like I can't believe like, I don't know, pick Travis, since you used Uber, like gets 10 times more than his director of marketing. Like, does he deserve that? And it's kind of like, actually, if you've seen these CEOs go through the pinholes and dark nights that they go through, like fuck yeah, they do deserve orders of magnitude more compensation because the thing wouldn't exist without them willing it into existence. And it's like I hope people who have followed along on the story gather some shadow of that because I think empathy for that makes us all better employees, better investors, better customers, like appreciate more of the world that we see around us and the character that it takes to create some of the things that we take for granted if we don't pay attention to it.
Zach Marshall: One of the things you said there like really hits it on the nail – it’s that willing it into existence thing. Like that's every successful company. It was willed. I mean, it was willed into existence when- I mean, it's got to be why these top tier pre-seed investors that have like had multiple big wins, they always say it's about team. I mean, they've picked people who are ready to will, like just do whatever it takes to get it done. Yeah. That's why like the work-life balance thing is such a goofy topic for a founder because it's like this is who I am, not just the company, but like I do hard things. I've been doing hard things for the last 15 years. It's not going to stop. If I wasn't doing this, I'd be doing something else that's super hard.
Eric Jorgenson: I remember asking you like our first episode, I was like, Zach, why'd you join the Navy Seals? You were like, well, I was in college and it wasn't hard. I thought it was going to be hard. It wasn't hard. I Googled what's hard. And I did the thing that's the hardest thing I could find to do. And of course, like what else would you do? It is obvious. You're a beast.
Zach Marshall: Yeah, I like to think so. We'll see. Ah, man, willing it into place. That's the phase we're in. I'm about to will payroll into existence for the next 7 months.
Eric Jorgenson: I like it. I think I asked you this last time, but it could become a pretty good regular question. Is there anything that you have changed your mind on in the last 3 or 4 months? I don't know if this is a helpful prompt, but I remember last time you said you had some mottoes or like visions that you kind of kept revisiting, and I wonder if you've actually like added or removed any of those that you kind of- your touchstones that you go back to kind of refocus and prioritize.
Zach Marshall: Yeah. So, the motto stuff I think is really important, but I haven't used it for maybe the last two months. And I think the difference has been that the direction has become more clear and I've become so busy and I switched offices, so they're not where they used to be. And so, I kind of internalized those mottoes, the big one that like one way that I support my family is by creating a massively successful business and by giving it my all. Like having those things internal, I guess, the shift is like I'm not repeating mottos every day. I'm not reading those. And so, I guess that's a bit of a change. I wouldn't be surprised if during another emotionally hard time, if I get to one, the difference between entrepreneurship is hard, sometimes it's hard because of all the stuff, other times it's hard because you're on an emotional rollercoaster. I'm not on an emotional roller coaster right now, which is nice. Like I went lukewarm in the middle there for a minute. It was like are we bootstrapping? I mean, one of the reasons that I pushed fundraising off, I was like we'll just get profitable. I had a lot of different people giving me advice and all these different directions. And I think coming out the other end of 10 months as an entrepreneur, I've gotten a lot better at taking every piece of advice in, adding it to the group, but not taking any of it as like gold. Like there's no- nobody knows how to run this business better than me. And I'm only just learning how to build and run this business. Nobody else has been on the hundreds of calls with these completely different customers, some asking for one thing, some asking for something else, like other people telling me this is silly, it doesn't fit. Other people are like, man, I tried to build this myself inside of my organization. You've got all these different people. And then on the mentorship side, it is the same. You have mentors who I really, really respect who are a lot more focused on, let's say, passive wealth creation or so they're like, man, can you turn this into a business where you work 4 hours a week. Other people who are focused on, man, you got to build a social profile, so this, this and that. So, I think the big shift has just been like I hear it all and I do my best to not make a pivot or take a quick reaction on any of it and really consider it, sometimes write it down. And that's been, I mean, that's been really, really important. There was a minute where like, well, we'll build a home threat assessment business, like if we can get this the size we need to and so on. But fortunately, we climbed out of that because having a super strong business line that does home threat assessment sounds great. But the reason we picked that was because we can fulfill the work with vendors for a marketplace. We can use it as marketing to get international security so that we can fill the work with vendors as a marketplace. Like we can get into businesses that we can then start selling workforce management tools as we build them and everything else. So, it's likewhy let a tiny bit of success in one space push away the goal, which is a multi-billion dollar company. Maybe the other thing I've learned is everybody says they want to build a $1 billion or a multi-billion-dollar company. I do. I don't know if I've ever heard a pitch ever that somebody wasn't like and we're going to be a billion dollars in 7 years. I don't think most people believe it. And I definitely don't think most mentors believe it. And the mentorship part is where it's hard because mentors want what's best for you in a lot of ways. They want you to be successful. They want your family to be successful. Yeah, they want you personally and that's so important and they have so much more experience. They also went through the billion-dollar dreams, most of them, and maybe it's because I don't have a billionaire mentor who did it, who actually got to that point, but I think the majority of the one-liners and wisdom that I've had to like take and couch for later has been stuff that actually takes away from my multi-billion dollar vision. And so that's been a shift in my own like filter system.
Eric Jorgenson: Yeah. Because one of your mottoes was like we are building a venture scale billion dollar plus enterprise value concept.
Zach Marshall: People who love me dearly are like that's cool, man, but man, you could sell this company; if you get that contract, man, you could sell this, you'll have 5 million bucks. You can go buy the bass boat, like you're going to0 your set. And it's like, well, sure, but that's not what I'm trying to build. I'm already set. I have a house in Rochester, New York, with the mortgage is like what it costs to like get a gym subscription in San Francisco. Like I'm good. What I want is to build a bad-ass company. Our new mission, the way we've put it, is we're increasing the quality of life of 1 million workers, men and women, in the security industry while making the purchase process less complicated and cheaper. So, the outcome is quality. Obviously, the mission's written better than that, but like that's the idea is like we're going to impact a million people on the worker side and we're going to completely change a dirty industry. Like I always come back to this one liner from one like executive security manager that I met who said the private security industry is a dirty industry of relationship arbitrage. And I was like let's fix it. Come on. It's 2022. Like this industry has no transparency, software, anything. Like it's crazy.
Eric Jorgenson: Yeah. No reviews, no Carfax, no CarMax, no well-lit safe marketplace, no accumulating information anywhere, no directories.
Zach Marshall: It’s nuts, man. I mean, there's literally people running security at massive firms, massive companies that have zero experience. And I'm not saying that they're not good managers, which is probably what they do today, but somewhere along the line, they were responsible for the safety of assets and people they had no idea how to protect. None. And that's because it's like an edge industry that people purchase for a bunch of different reasons, liability, asset protection, whatever, with no experience buying. They don't know how to buy it. Nobody knows how to buy it. They need a Carfax report. They need reviews. They need somebody to coach them there and not take a 40% cut off the top.
Eric Jorgenson: Yeah, I love that – increasing the quality of life of the 1 million men and women who work in the security industry. Like put it on the deck. I mean, I hope that helps- and that should speak to everyone involved in the industry too. That is the kind of sort of principled stand that earns you like market leadership I think if you execute on it in every message and way and means that you have like in all those relationships, which starts with phone calls, which is exactly what you're doing. Like that's why you have to be on all these calls. You want everybody who works with Conterra to understand that vision from early on and appreciate the values that you're operating with.
Zach Marshall: And if we take that as the north star, we're going to increase the quality of life of these million people, and we use that as a filter for everything we do, it's very clear that quality comes alongside that, that customers getting treated well comes alongside that, that transparency comes alongside that. Like all the other stuff kind of comes in line.
Eric Jorgenson: To reach a million, you need the scale that technology gets you and that reinvestment gets you.
Zach Marshall: Yeah. And the market's about 2 million people today. So, saying 50% of that, what I'm actually- I'm not saying I'm only going to get 50% of the market. I mean, LinkedIn has more than 50% of the market for their category. I think we're going to take the whole market. I just think the market's going to reduce because the quality is going to go up. We're going to find that the majority of projects that currently get staffed with 40 people get staffed with 25, but all 25 of those people have livable wages instead of getting paid 14 bucks an hour of 300% [inaudible 1:13:30].
Eric Jorgenson: Yeah. With a lot of weird- I mean, I think in the first episode we talked a lot about the part-timers and sort of transient unqualified people who work in this industry, kind of on shift or event basis who really haven't been trained, but they need bodies in seats or in shirts.
Zach Marshall: I mean, don't you want the security at the stadium you're going to watch a football game in to like be qualified?
Eric Jorgenson: Yeah, I think of the gif of the guy doing the pat downs without even like touching people.
Zach Marshall: That's a great example. And what's funny about that is the higher quality guards and higher quality managers and security professionals in a space like that, the answer to that meme might not be a full hard pat down of every single person. It might actually mean a metal detector. It might actually mean a wand because a wand would work versus what they're using. But somebody has to have the experience and the credentials and professional capability to look over at their boss and be like you realize we can't actually hard pat down 20,000 people, like it's not possible; you realize that we're not actually doing anything here, right? And nobody at minimum wage, unqualified is going to say that. What they're doing is they're going to put in their time, and no hard feelings, man, you're trying to get a job done. I would rather that same person get some training through our app, get some internal credential, then gets their first gig, and from that gig gets a reputation for doing their job well, and then can move up that ladder. I mean, not everybody's got to be a Navy Seal to go do security. I mean, the majority of security out there doesn't require that, but it does require training, professionalism, and incentives, and I think the incentive to get the job done right means you got to be paid a real wage.
Eric Jorgenson: Yeah, I agree completely. There's something you dropped earlier that I thought was really cool, the prioritize and execute, the like mental model from time in the service. Is there other stuff like that that's kind of either you learned from your experience as a Seal or elsewhere that you still apply as a startup founder and CEO, whether it's like, I don't know, caffeine management or diet or how to handle sleeplessness or other sort of mental models like that of just ways of thinking and working?
Zach Marshall: Yeah. So, we've got a lot of acronyms in the military. We've got one called find, fix, and finish, which it's used for targeting, for finding bad guys and dealing with them. The same methodology is useful in sales and the same level of like amount of time per category there and like what you're trying to do. Another one is like AARs, after action reviews, and talking about what did you think was going to happen? What did happen? What would you do different? That kind of thing. And understanding that a debrief is a requirement, not a like, oh, this is a positive culture thing or whatever. It's like, no, the debrief actually teaches you something every single time and you are the primary researcher. So, like figure it out and do it. I have another saying that I took from the teams which is always err on the side of aggression, moderation is for cowards, which is a great one. My wife loves it. I say it to my kids all the time. They need a little bit more context before they take that one to bat. But I think like that's what founders need to do. I think you have to err on the side of aggression, moderations for cowards, lukewarm is not getting anywhere. If you're making decisions in your venture backed business like a person, like how you deal with your own finances, how you deal with your own time, how you- it's not going to grow. And I've had bouts of that, but some of these mottoes have kind of come back. You know what else, it's like as far as like health, the key there has been like just do it. Like you got to just keep doing it, even though you don't want to. And having some discipline behind that from the military has been helpful. So, like even on- I mean, I wake up some days and the absolute last thing in the world I want to do is go to CrossFit at like five in the morning. But you just got to go. You got to go do it anyways. It's funny, I'm not huge on the like the different, I don't know, social groups, people call it like CrossFit of cult, those kinds of things. the gym I go to in Rochester, Park Ave CrossFit, the only reason I went was this is the closest gym, like it was a gym I could walk and run to, that had Olympic lifting equipment. And I'd never been in a CrossFit gym, and I was worried it was going to be a cult. Not this one, man. Everybody just shows- at least the early, all I do is the early morning class. And it's like, literally, it's just a bunch of people who show up, work out, laugh, and go home. Nobody's competing nobody. Nobody's going to the CrossFit games out of that crew. I think there's some people in the other groups. So, I found that to be nice, that as an entrepreneur, I don't have to think about anything. I can just show up and do it. And then like to add to that kind of discipline side, I've had to cut back on that a little bit with the phase of the company we are in now with how much I'm working. But again, in the military, I just learned it. It's like you’ve got to keep pushing your body and growing that. So, I've switched to like running and I got to do something. So, if I can't make that time because I was up till 4:00 AM, it's like, well, okay, I'm going to go for a run. I'm going to go do something. So that's been helpful.
Eric Jorgenson: Something you said in there is inspiring me to do another sort of last or second to last question. Like erring on the side of aggression, moderations for cowards, which I love, and thinking about what you said, like you can't act like a normal person when you're doing a venture scale business, like you have to just learn to think differently and in extremes and in power laws, and to me, that is the thought process of leverage. It's like what is the highest leverage action available to me right now? And I was talking to my buddy Andrew Finn who was on this podcast, and he's like entrepreneurship is basically a series of refocusing on high leverage actions with knowing that that changes after each iteration. Like after you take each action, it changes. And I wonder if that resonates with you and if you have like a few things stand out to you from the last couple of months of being like that one hour was incredibly well spent or feeling sort of the high leverage work shift over time.
Zach Marshall: That whole idea of it shifting every time lines up with the OODA loop as well. The observe, orient, decide, act. It's pretty popular in the civilian side. It was extremely important in civilian tactics, where every time you take a big tactical action, everything changes. It's not just where you are in the field or where your platoons are or your different operators. The enemy changed, the sun angle changed, like everything changed every single time. And so, you can't just plan seven steps ahead. You can have a plan. Plan your dive, dive your plan, which is another one we use for diving, which is pretty much space because we do it at dark or at night, totally dark with like a compass and like your fin count to figure out where you're going, so you better have a good plan for your dive if you're doing underwater nav like that. But the reality is your plan is only good until your feet hit the ground. It's always wrong. Everything's different. And so, you have to have that OODA loop always going, you're observing, orient, decide, act over and over. I mean, there’s a push and pull of that I think in entrepreneurship and certainly at Conterra where we also don't want to be pivoting our primary focus every 15 minutes. We can't pivot the company every two weeks because then we get to the end of two years and we're like, wow, our company's only been working on this for two weeks because we've pivoted a hundred times. So, I'm not sure what the catalysts have been. Definitely lately, it's been that pivot to demand, everything changed. But then it's been all small pivots inside, which feel more like development iteration than they feel like fully shifting direction. And we have to go all in sometimes on things we didn't expect. So, for example, Colorado surely was not like one of my targets. I wasn't thinking, oh, we'll build out in Colorado. I was thinking pretty much everything's coastal, people travel these places, vacation, all the kind of stuff. We have like three clients in Colorado. And so now, it's like, well, we're pivoting, a piece of our company is going to be in Colorado. We're going to do these. These are some awesome clients. We're going to figure that out. And then once we've gone there, probably mid-May, end of May, we're going to have to- like that AAR is going to be like, okay, do we ever come back to Colorado? Like was this worth it? And if not, we pivot. And you might say, oh, that doesn't seem like a big deal. Well, it certainly is because that next decision on if we're coming back means whether or not we're going to open an entity there, whether or not we're going to get licensed to do other security work and kind of hold liability for the marketplace there. There's a lot that goes into that decision and you just kind of have to swing. Like after I just spent four days in LA, it's clear. There's no question. I mean, the amount of referrals and conversations I've had since then. I think in one week, it skyrocketed, like Beverly Hills, Berkeley Heights, like Malibu, Agoura Hills, like all of it, every one of those fits in our category. So, it's like we're doing that. And everybody likes to brag about this stuff. So, like put the two together, let's go. But yeah, I don't know. Those are probably the work catalysts. At home, I think it's just been having to really consider just like what does working hard at home look like too? Like I can't just throw in the towel at home because work is really hard. So, it's like what does that look like? And up until I opened up fundraising, that meant my phone was off from 5:00 PM to 8:00 PM if I was home during those hours. So usually at least two hours a day, my phone was off, which helped me not think about work during that period, so my kids got me and my wife got me. But then, you got to continue to adapt to what you've got going on. For fundraising, that's not an option. If I've got an investor who says he's going to call and it's a timeframe, I'm not going to say, hey brother, sorry, don't call me that during that moment because I'm not going to answer. It's like, nope, you’ve got to be on. So you just got to pivot along with it. And yeah, I guess I would say that to anybody who's a parent and getting into this game is be ready to work hard on both. If you don't, it's going to fall apart.
Eric Jorgenson: Last question, how can we, we as me and listeners, help Conterra? Like what is a useful- maybe referral? Obviously the fundraise is going on right now, at least probably will be when this podcast comes out, for probably a week or two at least after. But how can we show up for you and continue to contribute and help you increase the quality of life of the 1 million men and women who work in the security industry? I like that mission. I'm going to keep using that.
Zach Marshall: I mean, that's the mission. And that's why we got into this in the first place. The first idea behind this was the career enablement platform for top tier veterans to do international contracting work. So that was like the first iteration, and it was to protect, it was not to unionize, but to protect and help these top tier operators get paid what they deserve. We're still going to do that, and we're still building that into it. It's just we're going after a million people instead of 800. So, how can the listeners help? So, a ton of different ways. Obviously, we're growing on the home threat assessment and the travel security management side. We're ready to serve both those markets. So, I'm ready to have a sales conversation with anybody. Also, the majority of the conversations I'm still booking are just customer like discovery calls, like Steve Blank’s customer discovery where I ask for 25 to 45 minutes depending on, I ask for 45 or 25 and have them choose, and then I keep to it. But the idea behind those conversations is I ask a lot of details about how people are purchasing services, what types of services they have, what type of security scenarios they've been in in their lifetime. I try to stay away from the what do you think of this product? Or would you buy this? And so, anybody who wants to have that conversation, get on the phone with me, I'd love to have it. I’ll buy you a beer or something if we ever meet in person afterward. But the idea is just to get more information from more people. So, you don't have to be ultra-high net worth. Really, if you've ever paid somebody else to set up anything on your house, you probably have enough of a fit that I can learn something from you. The next would be anybody who travels, like love to talk to those people too. How do they deal with security guidance with a medical concierge, that kind of thing. So, this is all customer side. The really key introductions that I'm just getting into right now that are helpful and have been extremely fruitful have been to security managers. So, anybody who runs a security operations at any size company, they purchase a lot of vendor services, and so hearing how they purchase is important. Fundraising side, yeah, we're raising 200K now, hopefully honestly, hopefully, it is closed by the time this podcast comes out based on the traction we have so far, but I would love to talk to you anyways. We're raising on safe agreements, so we can- it's a little fluid, we can move that around a little bit. And then of course, I'm starting to build relationships with like bonafide venture capital firms for the series seed. So, I've already started some of those conversations. Now I'm taking it slow because I need to focus, when we talk about prioritize and execute, but that's a key KPI for me over the next 180 days is building strong relationships with a few top tier seed funds so that we're not going into the market blind in 3 months going like, oh geez, I guess we just cold call now. Last one, since I've listed them all would be marketplace people, man, anybody who's been inside a marketplace and has dealt with it, especially a services or labor based marketplace, but I'm really interested to learn how some of the unit economics worked in your company. Because it seems like everybody does it different. NFX has some incredible videos, podcasts, and essays about it, and there's some cool resources online, but I've found that almost across the board when I talk to people inside marketplaces, it's much less sophisticated than what's written down. I shouldn't say sophisticated, maybe complicated. There’re all these words that kind of come together. It's much less straightforward is what I wanted to say. It's like there's a lot of experimentation. And so, hearing what people ended up on would be helpful.
Eric Jorgenson: Yeah, that's super interesting. I'm sure, we should try to track down somebody from RigUp and some of the other- especially the staffing and industry specific marketplaces. I feel like those would be really interesting conversations and totally like non-competitive. Like why wouldn't somebody at RigUp want to shoot the shit with you and share some observations.
Zach Marshall: It's funny, real quick, you said non-competitive, one thing that's been interesting in this market and is starting to really work is like vendors didn't trust us at all before the first six months. Like they really didn't. I think they thought we were going to steal their contracts, compete with them. We're just trying to learn from them, to like do their job better or something. Now that we're collecting the demand side first, they are answering the calls, but I still have to take 10 minutes of the call to describe how we're not competing. It's like, look, we're bringing you business. We're helping you do this. Our goal is for you to be the most successful vendor possible and to have higher quality outcomes and to have better people applying for your jobs. Like that's what we want to do. But man, it's hard. They just, it takes a second for them to be like, oh, okay, so let's figure out how to help each other. And I'm like, cool. I know how you can help, let's talk because I planned this call.
Eric Jorgenson: Which is back to the quote you mentioned, a dirty industry, monetizing relationships, I'm paraphrasing.
Zach Marshall: Industry, sorry, a dirty industry of relationship arbitrage.
Eric Jorgenson: Relationship arbitrage, yeah. Which, yeah, no wonder everyone kind of comes in with their guard up to even what seemed like casual conversations. Because you just- if you've operated in a zero-sum industry, let alone a sort of relationship arbitrage industry, your whole career, it's really- I think people in tech have a hard time appreciating how different the mindset is of some of the people who work in industry. Like if you work in a real estate brokerage, people are trying to steal deals from each other. It's fucking weird and savage. And you have a frienemy relationship with the guy a cubicle over. It's not like you all have shared equity. It's not like you have stock in the business. And it's not the mindset of growing a pie to share with everybody.
Zach Marshall: I talked to one employee, a security guard employee, who said that he switches companies that he works for every four months on purpose. And the reason he does that is because around the four months period is when they stop treating you well, when they start to treat you worse and worse. And he used the term abuse. But what he meant was at first, your shifts are good shifts. And then they promote you to this other role. And well, now your salary, but now they're going to actually make you work like twice as many hours, so you're actually making less money for your time. And then eventually you have no control at all. And this was this one experience. So he goes, yeah, I just quit every 4 months; I switch companies because they just abuse you after that. And I was like, oh my goodness, we got to fix that.
Eric Jorgenson: Which sucks for everybody.
Zach Marshall: It is so predatory. It sucks for the people who are paying for security. They don't want a guy or people who are getting like forced into like bad hours with bad training with bad outcomes. And on top of this, what we know and see is that those main companies don't care because they have the long contract anyways, and their business model, more or less, is look, the value we bring is no matter what happens, you won't get fired because you hired a big name. Oh yeah, somebody broke in, there was a fire and the fire safety stuff didn't work the right way, blah, blah, blah. Well, insurance will still cover it because you hired a big name, and you won't get fired because you hired a big name. It's shitty.
Eric Jorgenson: Gross. Gross and bad. The opposite of- gross and bad and the opposite of Munger’s seamless web of deserved trust, which is how we all want to be spending our lives, the optimal sort of relationship that we can have with others. Man, as always, thank you so much for taking the time and showing up and being candid. I know every hour matters for you and your business and your family. So, thank you for keeping us all up to date and bringing a little bit of your experience to the world and sharing what you learned. It means a lot to me, and I enjoy it. And we have thousands of people sort of following along on the journey and rooting for you. And it's fun to see it unfold and learn altogether.
Zach Marshall: I definitely enjoy it. I enjoy coming on here and looked forward to today. I cracked a beer for this one. It's a cool break from the reality. And I'll get back to my whiteboard list of people here after this is closed up. But it's fun. I do wonder though, you mentioned something earlier of like how getting CEOs to talk about the realities, I wonder at what size company it will be where I just start to sound like the same talking box of every other CEO founder who has to like keep 99% of what's actually occurring under wraps. We'll see if that ever happens or if we can build open forever or what. But hopefully we can just have a great therapy session once a quarter.
Eric Jorgenson: I hope so. I mean, maybe we'll have to do it offline, but like we're in a beautiful spot where the podcast feels like a scale where it's still this kind of intimate thing. And your business is small enough that it's not like you’ve got 400 people working there and you’ve got somebody at your company listening to it who's got like an adversarial relationship with you. And like investors are trying to listen and nitpick every little thing. And I don't know, we're all rooting for you and support each other. It is interesting to think about where that flips.
Zach Marshall: If we build such a great business that I can look at my investors and I choose the terms, then I can do this normal forever. We'll see.
Eric Jorgenson: Let that be the goal.