“We thought we are going to be stars and instantly famous. That everyone was going to use us and investors would be lining up at the door to throw money at the new hit thing.”
On a Wednesday evening, after 2h drive from Cupertino to San Francisco, I’m meeting Jon Gillon, CEO of Roost at his apartment in Russian Hill district. I park at hilly Filbert St., one of those super steep streets, where it seems crazy for cars not to roll over. We’ve talked for 1 hour about the story of Roost and insights on how the innocent idea that two brothers came up with, within two years grew to $1,3 mln angel-funded startup and $120,000 yearly revenue.
S.G: Your startup Roost is solving a problem that is so common all over the world. Even I experienced it a while ago in USA. Tell us, please what is Roost?
J.G: Roost is a peer-to-peer marketplace for storage space. Basically, we let anybody, who has any unused spaces in their garage closet, attic, basement, make money renting it out to people who want to use it instead of the storage facility. So people looking for space could find it in their neighborhood and save money. We let people monetize underutilized space in their homes. It is a win-win for everybody.
S.G: Would you call it Airbnb for space?
J.G: Yes, it’s Airbnb for non-livable space in your home. We actually do parking as well, so it’s Airbnb for storage and parking spaces.
S.G: Your company is based in San Francisco, right?
J.G: Yes we are in the Inner Sunset neighborhood, actually at the same office where Craigslist and Zappos both started. This is a good market place vibe there.
“My brother moved from Texas to SF and needed place to store a box full of stuff for only two weeks. Storage facilities are extremely expensive here. I said to him, that if he buys me dinner for the next couple weeks, I’ll make room in the locker so he could put his stuff there. When he was so enthusiastic about doing, it hit me.”
S.G: Was the idea born also in San Francisco?
J.G: The idea was born in San Francisco couple years ago. My brother moved from Texas to SF and needed place to store a box full of stuff for only two weeks. Storage facilities here are extremely expensive. It had been about $300 a month for 5 x 10 feet and it required a monthly minimum, so we couldn’t afford that. I had a storage closet in my apartment, where all I had was an old grill and some junk. I said to him, that if he buys me dinner for the next couple weeks, I’ll make room in the locker so he could put his stuff there. He jumped at the idea! When he was so enthusiastic about doing, it hit me. We had this brotherly trust, but if we could build something that created trust between strangers, then we really had a good idea here. Something that’s a big thing for a lot of people.
S.G: That was two years ago?
J.G: That was Thanksgiving 2013.
S.G: Were you born in San Francisco?
J.G: No, I was born in Washington, DC and I moved out to SF about 2 weeks after graduating college in 2012.
S.G: What were you doing before Roost?
J.G: Roost is actually my seventh company. I failed five companies in college, I was always starting things. I raised funding for a couple of them but you know, bunch of them fizzled out after failing to raise money or find developers. But not all of them were in tech. I invented a beverage, then a new type of footwear. The one that I raised money for was a company called Trip Sell — a travel-tech company. And then when I graduated college, with a few friends of mine I started a company called Property Tax — helping homeowners drop property taxes, which is still going today. And then the idea for Roost came.
S.G: So you’ve been always more like an entrepreneur soul, right?
J.G: Definitely. I’ve never really worked for other people, other than doing odd jobs, summer jobs and stuff. I got fired quickly from any job where I worked for other people. I just burn out, unless I’m passionate about what I’m doing. For me personally, in order to feel passionate about what I’m doing, it’s gotta be something that I’ve come up with myself.
S.G: Let’s talk about the beginnings of Roost. When you founded Roost, how many people were there in the company?
J.G: When the idea came, it was my brother and I. God bless him he wanted to help start the company. He studied marine biology and ecology, and he had never thought about starting a business. But even he got the jitters when thinking about the idea. My brother has always been the level-headed one in my family. I had exhausted the friends and family money for other start-ups, so he brought a little bit more security and safety to friends and family investment. With him on board we were able to raise $20,000 from friends and family, defined the product, came up with the first names and got the legal structure. Basically, right after we found our other co-founder, Bonnie, who was a CTO, my brother left to grad school. He is now in Seattle growing oysters and doing what he is passionate about. He helped us get from the initial idea to starting the development, which is one of the biggest hurdles.
“At the time between leaving my job and coming up with Roost I was a rabbit, I would help people install shelves and carry around heavy things. I put out an ad on TaskRabbit saying: ‘Seeking introduction to a programmer / project manager type with an entrepreneurial spirit and free time.’”
S.G: How did you find Bonnie?
J.G: This is actually a really interesting story. A lot of things that we found for Roost we did in unconventional ways.
I can’t code at all, I always have to get my coders set up my email address. I don’t know what the port is, or SSL, or any of this stuff. We couldn’t really do anything without someone who knew about coding. Now I know tons of coders and people in the area, but at that time we did not know anybody. So I put out an ad on TaskRabbit. At the time between leaving my job and coming up with Roost I was a rabbit, I would help people install shelves and carry around heavy things. I put out an ad on TaskRabbit saying: “Seeking introduction to a programmer / project manager type with an entrepreneurial spirit and free time.” Obviously, I didn’t ask for the coder to be on a TaskRabbit — but an introduction to, I thought, was something possible. A friend of Bonnie reached out to me and said she had a friend who just left her job. She was a project manager and coder at Wells Fargo, Charles Schwab, and she was looking to start a business. I was charged $75 to get Bonnie in a room with me.
She showed up and I pitched her on the idea. It was called Stow at that time and she loved it! I had her to sign an NDA, which now I know is a total bullshit. The next time we met I had my cousin on Skype from DC, giving her some coding questions. She checked out, she could code, if not the whole thing, at least get us up and running. From there, Bonnie joined and then my brother left. Briefly after that we brought another guy named Donnie who was a friend of ours, a Stanford guy, a smart kid, UX guy. He ended up though leaving pretty quickly which is good. This is kinda funny. He never really got along with Bonnie and then Donnie got a job offer to work for Snapchat from Spiegel, who was his fraternity brother at Stanford. So he’s now crushing it at Snapchat. Donnie left, and then we brought on Matt, our first coder.
S.G: Where were you operating from during those first months?
J.G: My brother and i were working out of my living room and coffee shops. When Bonnie came on, it was kind of weird to have her coming over to my house. She lived in San Jose at a time, so we started switching time between a library and Mountain View. The first base we ever got was at Parisoma, that little co-working incubator in Soma. We sat around ping-pong tables for couple hundred bucks a month.
S.G: You were probably renting the open space right? It’s a good idea for the very beginning, to rent an open space, because you get access not only to that space, but also to mailing list, to the events, to networking. Do you have the same impression?
J.G: Yeah, except Parisoma, which is a French network, and everyone spoke French there. It was a weird feeling, we didn’t fit that much there. We did then go to RocketSpace, which had a lot of good network, events and stuff.
S.G: It is similar when it comes to lawyers. They also recommend investors and the network for you when they like your idea. When it comes to the law stuff, did you have to hire any lawyers at the very beginning?
J.G: Yes, so thankfully my dad works at Pillsbury. He is the partner at one of the big law firms and through him we got a really good startup deal. You can get these at all big law firms, who will do sort of startup package. They will do something like $5,000 for the first $25,000 of legal fees, and defer your payments till you raise your first round. And we did that, we still use Pillsbury.
S.G: How about first investments, you mentioned that you gained $20,000 from friends and family at the beginning right?
“That was $100,000 when we had absolutely nothing. The three of us, not taking any salary really. We’ve had the whole next year to figure out our stuff. We ended up doing a $300,000 angel round. Then we did another million dollars round, after 500 Startups. Today we raised $1,3 million.”
J.G: Yes, we did $20,000 from my parents and close family, and then me and my brother, each of us, put $5,000 from savings. We had that for a little while, before we found Bonnie. Then we started coding, we could identify what the product would actually be, and we got the legal entities set up and everything. Then we got our first $100,000 investment from the fraternity brother of my fathers, which is kind of awesome. He’s a funny guy, doesn’t use a computer. The secretary prints out every email he gets, he writes a response and she types it for him. He is in stone age, so it’s crazy he would invest in a tech company. He is based out of Miami, I got in the call with him from San Francisco. We had a really great talk. Then, I said that I’m actually going to be out in Miami for New Years’ with my family and why don’t I come and meet him at his office. We set up a time, and in that one meeting we walked away with a handshake and a promise of $100,000 investment. Actually, with a few pretty slick moves, I negotiated him up from $25,000 to $100,000.
I looked at him and said:
– “So what’s your gut tell you?”
– “My gut tells me I am in.”
– “How much do you usually invest?”
– “Well, at this stage we usually do $25,000 – $50,000.”
– “Ok, let’s do $50,000.” – And then he says: “Okay, well, listen, how much do you really need to raise to get this thing going?”
– “Well, we need about $200,000” — pulled the number out of my ass.
– “Ok, you need $200,000, maybe we do $50,000 or $100,000.”
– “Alright! $100K!” — I slapped the table and stood up, shook his hand. I think that he loved the atmosphere, he laughed and shook my hand and said…
– “Alright, let’s do $100,000.”
He said he’d invest $50K in two tranches, and next $50K once we got another $100K. Then we got another $100K, and so he invested the other $50K. But I remember leaving the office so vividly, getting into the elevator, and my brother and I started hugging and screaming before the elevator even closed. I think his whole office heard us yelling YEEAH! Then we got down into the ground in Miami, we were screaming at the top of our lungs calling Bonnie, yelling into the phone. That night we partied. That was $100,000 when we had absolutely nothing. The three of us, not taking any salary really. We’ve had the whole next year to figure out our stuff. We ended up doing a $300,000 angel round. Then we did another million dollars round, after 500 Startups. Today we raised $1,3 million.
S.G: Good that you mentioned 500 Startups. At what stage of your company did you apply for 500 Startups and did you get approved the first time you applied?
J.G: We actually never applied to 500 Startups. That was another funny story. We had just launched our MVP, which was a total piece of junk. We had maybe our first 20-100 users. Most of it was taken from Craigslist, and none of them were really quality, but still. I had been asked through RocketSpace to attend a panel. It was my first speaker opportunity to be on a panel about marketplaces, they thought that we must have been doing well. They asked me to speak on this thing as someone had dropped out. Parker Thomson, one of the Venture Partners at 500 Startups, was the moderator. I spoke, I guess I did a pretty good job. I walked into the lunch area with my food, Parker motions me over to him and says:
– “Hey, I really like what you’re doing. Have you thought about applying to 500 Startups?”
– “To be honest, I have the tab open on my computer right now, was about to apply.”
– “Don’t worry about that. Why don’t you come to the office tomorrow?”
And so I went the next day to the office. The day after that, we got invited. Just so happens that our lease with RocketSpace ended that day, so I told Parker:
— “Look, we accept graciously. The only stipulation is we gotta move into the office today or tomorrow, cause we can’t stay, and I don’t want to sign another minimum six-months lease.”
So, literally, I was there two months before the program starts, I had two months of office space before, and two months of office space after. We had eight months of free office space, which was pretty cool.
“What it really taught me, was how to pressure myself, and how to step it up. I’ve really learned what it meant to work my ass off. It brought me to a whole another level of capability in my own energy level, to work late nights. 500 Startups really drilled into me what it meant to work hard.”
S.G: How did the journey with 500 Startups go, and what did you gain most from the program?
J.G: I think our 500 Startups was a little unique, because we got selected to be filmed for a TV show during the whole program. For about six months we were followed by video cameras filming us throughout the whole thing, so there was added a great amount of pressure. What it really taught me, was how to pressure myself, and how to step it up. I really learned what it meant to work my ass off. It brought me to a whole another level of capability in my own energy level, to work late nights. 500 Startups really drilled into me what it meant to work hard. It was good network too, obviously money was great, and it also helped me with hiring. We said we are 500 Startups company and it sounded sexy, better than being a nobody. I was always a very good storyteller, but I got really good at pitching. Dave McClure and the whole team there were making sure your pitch was perfect.
S.G: When you compare the stage of your company when you were joining 500, and when you finished — aside of the skills that you got, did you also take the company to the next level?
J.G: Yeah, we started with 100 listings on Roost, finished with 800. Not all of those were great. At the end when the dust settled, we were left with 400 or something like that. We found ways to make some things happen, started making our first money there. Yes, that was pretty nuts.
S.G: Right now, how many employees do you have at Roost?
J.G: We are seven. We’re about the same same size as we were there. We filtered out. There’s actually only one guy, who was there from the early days and who is still around. Oftentimes in your startup the people who you start with won’t be the people that you get to the next level with, and even the next level after that. I feel that as we learned what our problems were, we adjusted the team and the skills. People got fired and we hired new people. We filtered out to only eight players. Now our team is lean, but capable and ready to scale. We don’t foresee needing to hire until for another 4-5 months, because there is just too much business to handle. We don’t have any skills gaps right now.
S.G: What are you focusing on the most right now? Is it growth, investment, product features? What is happening right now at Roost?
J.G: It was always a mix of all pf those. We’re fighting a battle on many fronts. Primarily, it’s all about growth right now, getting our numbers up, because we need to raise money in January. We’re about to start a big fundraise, so in order to hit that growth, we’ve been working our asses off on launching entirely new product. From the tech part, we’re about to launch an app and a new platform in a few days. This is going to be entirely new platform. Our MVP is just getting deleted and we built everything from the ground up, with all the lessons we’ve learned, all the user feedback that we’ve gotten. The only thing we’re not worried about right now is hiring.
S.G: Have you already found a way for growth that is working? Or are you still looking for different things?
J.G: Yes, so one of the biggest things that we’ve done, which has been pretty awesome, is we made a few key partnerships on the parking side of the markets. Storage is seasonal and in the winter nobody moves, nobody needs storage. Right now we’ve been focusing on the parking market, which has no seasons. We partnered with Enterprise CarShare, Zipcar and Getaround — all car-sharing companies, who want to expand their presence in the rich and residential areas. You go to commercial garage downtown and it’s filled with Zipcar shares. You go out to the Outer Sunset, or to Pac Heights, or any other neighborhood that’s residential, and there is not a single car share because there’s no commercial garages. It’s arguably a pain in the ass to get these spaces. We have the team and a product built around this, so we can do it better than anybody else. We are now basically headhunters for these companies. As quickly as we can get spaces, they get rented out for many years and we get to a lot of money. Our average transaction size is $350 a month, and average transaction length is 3,5 years. That’s a lot of money over a long time.
“Our episode still hasn’t aired and that was pretty crushing. It’s kind of funny, we joke: ‘We gotta go back to build a company like we weren’t celebrity stars’.”
S.G: What is the biggest challenge you’ve faced at Roost so far?
J.G: I’ll give you a couple examples of punches in the face that were unexpected.
One, Bonnie left Roost the day before demo day at 500 Startups. That threw us in a turmoil and I had to change the deck. The night before, switch the pitch. I promoted Matt, who really built Roost and is now an incredible leader and CTO. He was the first hire. I promoted him to co-founder and CTO and that was one of the best decisions I’ve made. Ultimately, it’s worked out for the better, but you know, I felt pretty crushed. I thought: “Oh no, we’re not going to raise any money, and the company’s going to disband.” But everyone rallied to Roost and got behind me, no one left with her.
Another thing was when we had come to 500 Startups and worked our asses off for this TV show. The first episode aired, it’s called “The Bazillion Dollar Club”. It was on the SyFy channel, which is probably a mistake in the first place. With Netflix, HBO GO, Hulu — nobody sits down and sets their timer to watch network TV and sit through commercials anymore. It was in September I believe, that the TV show aired the first episode. It bombed and it got canceled right away. Our episode still hasn’t aired and that was pretty crushing. We thought that nationwide exposure is going to do so much for us. We had raised money around that. We have figured out a whole expansion plan based around the fact that millions of people all over the country were going to see Roost and be convinced to sign up, because we did such an awesome job. I thought the first episode was great, but no one was watching TV at that time. We had to switch a whole lot of plans and go back to building a company. It’s kind of funny, we joke: “We gotta go back to build a company like we weren’t celebrity stars.”
S.G: Well, I can imagine that you are having a lot of expectations and dreams around being aired nationwide.
J.G: Yeah, we thought we are going to be stars and instantly famous. That everyone was going to use us and investors would be lining up at the door to throw money at the new hit thing.
S.G: What is going to happen to those episodes?
J.G: I don’t know. We don’t even think about it. If they see the light of day — great. They say the episodes had been cut, its been edited and it is ready to go. It was a high budget production. I saw a little bit of our episode and it was great! Apparently, they’re shopping around for different networks. NBC owns it, they’re trying to buy it out from them, so they can show it on other networks. I care, but I don’t think about it. It makes me a little depressed.
S.G: Well, who knows. If no one is going to end up using it, I can take it for Silicon Valley Show (laugh) !
J.G: Yeah it’s kind of funny actually. It might have been a blessing in disguise, because we were planning on launching our app before the show aired, so that people can download it. We were nowhere near ready to launch an app by the time it was projected to air. It might have been terrible. It caused us to take a look at what we’re doing and look into sustainable organic growth. Sustainable growth in ways that didn’t rely on another piece of luck.
S.G: I can imagine that many startups rely on any deal they are promised to have. And they are pitching it to investors, although it’s not there yet. Obviously, it’s better not to rely on things that are not certain.
What’s the next big milestone Roost wants to achieve right now?
J.G: We are launching the new app and the new platform which is going to be great. Right now we’re very hands-on with all our users. We hold people’s hands walking through the platform and getting them to close in. With this, we’ll be able to just send people to our website, or tell them to download the app, and they will be able to do it themselves. When they can do it themselves, it can scale, and with that we can expand to new cities. If we don’t have to baby every single user, and we don’t have to keep track of every transaction that’s going on, read every message, that’s a major milestone. We’re doing pretty well with growth in the last three months. We’ve just about tripled and earning about $120,000 a year. We’re doing about $10,000 a month, and we are growing at 25-30% a month. The next big milestone is that we’re going to raise $2 million seed around and expand to the next several markets. Now our platform is scalable and we don’t need to go back to the drawing board. We can focus on other markets and new partnerships and whole new horizon.
S.G: We’ve talked about some advice that we could give to other early stage startups, but is there anything else that you could especially think of as of an advice that you would give to others?
“If you can, raise money, don’t be afraid to give up piece of your pie. Founders will sometimes try to hold on to be a 100% owner — ‘We’re going to bootstrap to billions!’ Don’t do it. There’s someone else who’s got your same idea, who’s got funding and who is going to beat you there.”
J.G: Yeah, I’ve actually got a few core pieces of advice that I talk about a lot.
One is — don’t work on a project unless it keeps you up at night. If there’s one idea that you’ll know you want to work on, gets your adrenaline up when you think about it, you can’t go to sleep and you can’t do anything but think about that idea and want to die working on it, that’s what drives passion. If you work on something, because as an entrepreneur, CEO, founder, may not be your idea, but you still like the idea so much that it gets your adrenaline up, that’s the first sign that you will be able to last at it. If it’s an OK idea and you’re just looking for the next thing, you’ll burn out. You won’t care, you’ll look for that next thing that you’re passionate about. So don’t work on it unless it keeps you up at night.
Another thing is — always ask for stuff. You never know until you ask. Being able to end an investor meeting saying: “So, are you in?” versus just waiting for whatever the next steps. You should be able to ask for money, to be able to say to a potential hire: “We want you, are you in?.” You gotta be able to say to 500 Startups: “We want to be here, let us in now.” You should take what you want. A lot of people feel sheepish and shy about this stuff.
Also, bootstrapping should not be your default position. I’ve bootstrapped a lot of businesses and when you’re bootstrapping, then everything is a challenge. From getting that office space, to getting a new computer or business cards. You can’t even get a t-shirt, a cup of coffee. Everything, that you do, is really difficult and you gotta sacrifice so much. You’re in pain and there’s stress about your bills that are piling up, that you are getting evicted from your apartment. If you can, raise money, don’t be afraid to give up piece of your pie. Founders will sometimes try to hold on to be a 100% owner — “We’re going to bootstrap to billions.” Don’t do it. There’s someone else who’s got your same idea, who’s got funding and who is going to beat you there. It’s all about race. Everything that you can do to give you a leg up, including giving away some of your equity for money, do it. That will allow you to make that bigger pie. That slice you gave up is inconsequential. You just make it a bigger pie. Bootstrapping sucks.
And then another piece that i always tell people is that in the early days you gotta celebrate a lot. For founders and the team, partying on every little milestone really helps feel like you’re building momentum. Toast to your first 10 users, your first 100 users, your first 200 users, your first introduction to an investor. And when your team internally feels momentum, it’s a sort of energy that projects on the outside. It will spark that fire that you need on the outside to do the stuff that investors will feel, users will feel, the public will feel. Doing something that’s controllable, which is celebrating little things, will have a big compounded effect on the actual company and momentum.
“I write my diary about the real problems that we’re having, solutions that we come up to. It’s not just all the good stuff. I write about roadblocks and the real stuff we are facing, that doesn’t look too good. I write about the winds and the real emotions. I put out monthly post.”
S.G: Last but not least, tell us about your blog. This is pretty incredible. I thought it would be so awesome to be doing when I was running my startup. But not everyone has time and courage to be sharing all these things in case their business fails.
J.G: I wanted to be one of those companies where people talk about radical transparency. That’s me. I started this blog about nationwide expansion and that’s the title: “Nationwide expansion fuck me.” It’s a peek under the skirts of recently funded badass startup, as we attempt to scale across America. I write my diary about the real problems that we’re having, solutions that we come up to. It’s not just all the good stuff. I write about roadblocks and the real stuff we are facing, that doesn’t look too good. I write about the winds and the real emotions. I put out monthly post.
This month I wrote about building momentum through partnerships and how to avoid shitty partnerships. Things that will waste your time, and what to look for in a real good partnership that will boost your momentum. I wrote about founders’ attitude towards problems, how to remove yourself from the situation if your head’s not on straight, how to actually put in practice ways to turn a problem into an opportunity. I talk about hiring. I have some pretty awesome ridiculous hiring tactics that help us find really good hires.
For instance, I called all the candidates for general manager role at 11 p.m. their time. I told them to send a video in my inbox by the time I wake up convincing me to hire them, because, as a GM we need someone who is entrepreneurial, and to me that means going to a situation with no rubric, no rules, with just a goal to win it.
S.G: How did it work out?
J.G: It worked out incredibly. We got people talking while solving Rubik’s cubes. People making jokes, and people signing up other people for Roost, with a camera filming them selling it to actual people. I give a really great piece of advice that one might say: “Oh, keep that secret, this is your secret asset.” But we are already doing it, so it’s not like somebody is going to make it, so that we can’t do it anymore. You should check that out, it’s pretty interesting.
S.G: What is the link?
J.G:It’s on medium — www.medium.com/@jongillon. You can find a whole series there.
S.G: We invite everyone to go to Roost.com too!
J.G: Wherever you are hearing this, if you have a space to rent out, parking space, any type of storage space, or if you ever need space too, then go to www.roost.com and you can find it there, make money there. I’ll give you a discount code SVSHOW. There will be a $50 credit towards any space or on top of any money, when you sign up for Roost. Right now we focus on the Bay Area, but within a month you’ll be able to use Roost all across USA.
S.G: Thank you so much. It was great speaking to you!
J.G: My pleasure!
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