Now the CEO and Co-Founder of Flo Technologies, Gabriel Halimi began his career as an attorney working in the plumbing industry. During that time he dealt with product liability claims for allegedly failed plumbing products – a crucial career step that led him to Flo.
Apple | Google | Spotify | Stitcher | iHeart
Your Big Idea: Successful Entrepreneurs have One Big Idea. Follow JLD’s FREE training & you’ll discover Your Big Idea in less than an hour!
Flo Technologies – Visit Flo Technologies website to learn more!
3 Value Bombs
1) Your slice of the pie may not be as big when you go partner with venture capital, but you’ve got a whole group of very talented, passionate people that are now on your side that can help you open doors and help grow the right team.
2) People who invest in your company are not investing so you can pay yourself a 7-figure salary. People invest in your company to make sure it grows the right way, invests its money the right way, pays its people the right dollar amount… and a glorious salary won’t be one of those things.
3) All cash is not equal. You have to find the right investors who share in your vision. You want to celebrate with them when things are great; and when you fall on tough times, you all have to stay aligned and be able to have those tough conversations when they come up.
HubSpot: Start giving your customers what they deserve. Learn more about how you can transform your customer experience with a HubSpot CRM Platform at HubSpot.com!
**Click the time stamp to jump directly to that point in the episode.
Today’s Audio MASTERCLASS: How to Launch a Family Startup and Land Investment
[01:43] – Gabriel shares something about himself that most people don’t know…
[04:42] – Gabriel talks about how he and his father got into the business together.
- It’s 5 times more likely that you’ll have water damage than fire or theft to your home.
- His dad was the mad scientist of plumbing -he’s been in plumbing for over 30 years.
- His dad invented different plumbing solutions; his last invention sold over 80 million units.
- Gabriel and his dad started working together when they had catastrophic water damage in their own home.
- His dad analyzed what the root causes for the water damage was, then set out to invent a device to help avoid water damage in other homes
- When people don’t have any ideas for a business, all they need to do is look around. There are obstacles, challenges, and struggles everywhere, and you might just want to create a solution.
- His father was able to invent a device that could find leaks anywhere in the home, shut off the water, and even pro-actively find problems before they turn into leaks.
[11:39] – How did Gabriel know they were ready to raise capital to run their business?
- The pain point is way too big; we needed a lot of capital to get the land grab.
- Being very curious and having a network gave me opportunities to spark conversations that led to great advisors.
- You have to get good advisors. You’ve got to get people who know more than you do and who are willing to make introductions for you.
- You’ve got to build a great team.
[17:03] – The best recommendation for finding great advisors…
- Start with your own network.
[18:17] – What’s a good percentage of equity to keep in your own family business?
- It depends on the business. It depends on how much capital you need, and how much momentum you get.
[19:48] – The benefits of getting an injection of capital
- It makes you much more disciplined.
- Gabriel and his father invested a tremendous amount of their time, which is their greatest resource
- People who invest in your company are not investing so you can pay yourself a 7-figure salary. People invest in your company to make sure that company grows the right way, it invests its money the right way, pays its people the right dollar amount… and a glorious salary won’t be one of those things.
[24:52] – What investment size means.
- You always want to raise more than you think you need.
- Venture capital not only helps build confidence on the business development side, but it also builds a lot of confidence in your team.
- Perception can be reality.
[27:25] – Gabriel’s experience when it comes to deciding the right investment size.
- Fund raising is hard.
- You need to have a lot of different conversations, especially if you want to be raising the right money from the right people.
- All cash is not equal. You have to find the right investors who share in your vision. You want to be able to celebrate with them when things are great, and when you fall on tough times, you all need to stay aligned and be able to have those tough conversations when they come up.
- You’ve got to have thick skin. You’re going to get a lot of no’s before you get a yes.
[29:41] – Gabriel shares one thing we should be thinking about when we design a pitch.
- It’s about telling a story.
- Be able to tell your story and be able to explain why you’re the one that’s going to take this huge opportunity and get that market share.
[31:39] – What happens post-fund raise?
- Keeping in contact with your investor is important.
- You need to immediately think about when your next fund raising is.
- 100% of the reason why startups fail is because they run out of money.
- You have to think about the things that will get you to the next level.
[34:05] – Gabriel’s parting piece of guidance:
- Your slice of the pie may not be as big when you partner with venture capital, but you now have a whole group of very talented, passionate people who are on your side, and who can help you open doors and grow the right team. It will give you a better chance of reaching success without having to dig deep into your own pockets.
- Visit Flo Technologies website to learn more about Gabriel’s business!
Boom, shake the room, Fire Nation. JLD here and welcome to Entrepreneurs On Fire brought to you by the HubSpot Podcast Network with great shows like I Digress. Today, we're pulling a timeless EOFire classic episode from the archives, and we will be breaking down how to launch a family startup in land investment to drop these value bombs. I brought Gabriel Halimi into EOFire studios. Gabriel is the CEO and co-founder of flow technologies. Gabriel began his career as an attorney, working in the plumbing industry. During that time, he dealt with product liability claims for allegedly failed plumbing products, a crucial career step that led him to flow.
And today Fire Nation, we'll talk about growing the right team. We'll talk about investing money at the right way. The fact that all cash is not equal and so much more. When we get back from thanking our sponsors. The My First Million podcast features famous guests, discusses how companies made their first million and brainstorm new business ideas based on the hottest trends and opportunities in the marketplace. One recent app was all about how venture capitalists make money. Listen to My First Million, wherever you get your podcasts. Gabriel, say what's up to Fire Nation and then share something interesting about yourself that most people don't know.
1 (1m 20s):
Hey, there are Fire Nation excited to be on the program. So thanks for having me, John interesting thing. People don't know. Well, I had a absolutely horrendous stutter when I was a kid. Like a lot of people have seen the movie king speech. My speech was pretty bad when I was in fifth grade specifically. I remember it reaching like a boiling point where I could not even say my name in front of my class of like 20 something kids, but I worked on it. I challenged myself, put my mind to it and now is my wife will tell anyone she can barely shut me up.
0 (1m 59s):
Now, if you had to share a one thing you think was maybe the turning points, was it just repetitive practice or was there something kind of special?
1 (2m 7s):
Did a lot, you know, I started doing a lot of public speaking. I ran for student council, which, you know, forced me to do a little debate in middle school. And then I eventually was the president of my middle school and had to give a speech in front of the whole school. I had a bar mitzvah growing up for those that don't know, that's like, you know, a Jewish Rite of passage. And so I had to read the Torah in front of my congregation. There was a bunch of those kinds of things where I pushed myself and I was like, Hey, if I can do this in front of these people, I just need the right tools and
0 (2m 39s):
The psychological thing too. Like you had to get over it kind of like the mental side of things.
1 (2m 43s):
Big time. I think your mind is running really fast when you stutter and it's, it takes a second to kind of process all the things that you want to say before you just, your mouth starts running. And so, and I think part of it was just, I was generally, I was always kind of a confident kid, so I wouldn't say it very nervous, but yeah, I think there was some element of nervousness. I don't know. I kind of rambled there, but
0 (3m 7s):
No, that definitely was a ramble. But what I will say your wife is right. She can't shut you up. No, but seriously, what I will say to that is it is one of those things that I've seen with other people who I've talked to and who have dealt with that, you know, either fear of public speaking or some kind of speech impediments, it's just as much mental and psychological as it is actually getting the right mechanics as well. So really interesting Fire Nation. I mean, public speaking is such a terror and a fear for literally everybody. Anybody says I'm not scared of speaking in public has either done it a zillion times or is lying to you as one of the two. So just recognize it's a game. It's a game of both the psychological, the mental and the actual mechanical side. But when I want to talk about Gabriel is the audio masterclass that we're going to be diving into today, which is how to launch a family startup and then land, investment, and buy.
0 (3m 56s):
While we are talking about landing investment, I'm not talking about actual land, I'm talking about like venture capital and stuff like that. So I would really kind of maybe like to know a little bit more about how you and your father got into this business together and actually first off launched this family startup. Tell us a little bit about that.
1 (4m 15s):
So my dad and I started flow technologies in 2015, flows, a water monitoring and control device for your home. One device, you install on the main water supply line, proactively monitors the whole water system to help you avoid leaks and catastrophic water damage, which is the leading cause of preventable homeowners, insurance claims every year. A lot of people don't realize that, but it's five times more likely that you'll have water damage than fire or theft to your home. Wow. So, yeah. Yeah. So our story starts back in, well, I guess it starts many years ago. My dad is kind of a mad scientist of plumbing.
1 (4m 57s):
He's been in plumbing for over 30 years and a lot of things that bored me for a really long time, but he had his own manufacturing plant when I was a kid and I worked there in the summers and he invented a bunch of different kind of plumbing solutions. His last invention sold over 18 million units. So my dad is like, he's a mechanical engineer by trade, but he's just a curious guy and is always coming up with different things. And so there was a number of things in his past that kind of led him to inventing flow. But our story together kind of started about 10 years earlier, where we had a catastrophic water damage claim in our own home.
1 (5m 38s):
I was in law school at the time. So I was living at home and the entire family was in New York for the weekend. We live in LA and it came back to our home in Los Angeles. I opened the front door and I'll never forget. It looked like it was raining in the middle of the living room. I mean, there was water coming down from the second floor. It took 10 seconds for my eyes to adjust to what, you know, what's happening in front of me. It was like, you know, incomprehensible, but there was, there was one water connector on the second floor from like a toilet, a 25 cent part that broke off of the main water supply line and water running uncontrollably for three days throughout the whole home.
1 (6m 19s):
It was two weeks before my sister's wedding that my dad was throwing. I mean, it was, it was a horrendous occasion for a number of reasons. I had to end up living in a hotel for six weeks because my room was entirely flooded. It was really bad. And that had a pretty profound effect on my family after having an incident like that because my dad, you know, having had the experience that he had come from where, you know, I didn't really explain this background, John, so maybe we can find a way to bring this back in. But yeah, so my dad was an expert witness for the plumbing industry for many years, over 10 years, he analyzed over a thousand water damage claims in people's homes.
1 (7m 6s):
So when there's a homeowner's insurance claim in someone's house, they'll typically file a claim with their homeowners insurance. Their homeowners insurance will pay that claim, but then the homeowners insurance industry will then file. What's called a subrogation claim against who they think is ultimately responsible for that water damage. So in many instances they would claim that the plumbing manufacturer manufactured a bad device. So they would, you know, Sue them for negligence or product liability or what have you pull a
0 (7m 36s):
Little bit out of the weeds here and take us to the punch
1 (7m 38s):
Line. So my dad analyzed these water damage claims for over 10 years and he realized what some of the root causes are. And after we had the water damage in our own home set on the path to invent a device that would help avoid this in everyone's home, going forward, he wanted it to be cost-effective enough that you can get it in everyone's house.
0 (7m 58s):
I want to step in here and say Fire Nation before Gabriel continues is this is what we're talking about. When people come to me over and over again and say, John, I don't have an idea for a business. I don't know what to do next. Where's my big idea, et cetera, et cetera. You need to look around you. You need to say, Hey, what are the things I'm curious about? Are the things I'm passionate about? What are my skills? What is my expertise in there are obstacles and challenges and struggles that are in every one of those areas. And you might just want to create the solution. And that's exactly what Gabriel is getting to hear hopefully quickly about the solution that his father got to. So pick it back up, Gabriel.
1 (8m 34s):
So my dad had this really specialized experience. He had this pain point and he decided that he was going to invent the solution to this problem. And I patted him on the back. I was practicing law and doing other things. And I said, that's great, dad, you go do that. And he's always working on funky stuff in the garage, but fast forward to 2015, I was done with my startup. I was working on a restaurant company that I was running corporate operations for and stumbled into the garage to kind of see what the old man was working on. And here he had done it. I mean, I knew the pain point really well because we experienced it ourselves, but he invented this one device that could find leaks anywhere in the home could shut off the water can act proactively and find problems before they turn into leaks.
1 (9m 20s):
And I was like, dad, this is, this is incredible. Like, what are you going to do? And the first thing on his mind was to do what he did with all of his previous inventions, which is just to license it to a third-party company. And you know, it didn't take long for us to kind of agree that any company we would give this to would find a way to screw it up. If we give it to a plumbing company, they're not going to understand the technology inside and like internet of things. And
0 (9m 45s):
Last right now, Gabriel, you guys decided to launch this yourself.
1 (9m 49s):
Boom, there you go. We decided, yeah. So we decided to do it ourselves. And it took a while of me and my dad kind of debating the right way of going about this. Well, I wouldn't say we just decided to do it. My dad tried to talk me out of it for awhile. He's like, here you are, you have a successful corporate career. Like why are you going to quit your job and focus on this thing that I invented in the garage. But I had a lot of faith in my dad and the product that he invented and I saw the opportunity. So when we did quit, there were a lot of things that we had to decide like who is going to do what, you know, we were not going to, I was not going to run a company with my dad. His co CEO's cause his brilliant of an engineer as he is.
1 (10m 30s):
And as successful as he had been in business, this was a different kind of business than he had ever operated.
0 (10m 36s):
And it seems to me like you guys have different skillsets too. I mean, you had been, you know, through law and a lawyer and these things and your father was like a Venter inventor, like doing these funky different things. So you guys launched the company. You obviously have some legitimate success because I want to get pretty quickly here to the next point, which is you turn a corner, you're obviously generating revenue with a company and you decide, Hey, it's time to kick this into high gear. It's time to raise some money. What made you decide to do that? And how'd, you know, that you were actually ready for an injection of capital.
1 (11m 7s):
We knew really early on that we were going to need a lot of capital to run this business. Your first point, we did have very complimentary skillsets and I feel like that's a necessary, we can't be stepping on each other's toes constantly as second guessing each other's decisions. So my dad being the engineer and more of the product focused person and me, the focused on fundraising and kind of corporate operations and sales and how are we going to grow this thing and get it into everyone's homes? That was a great start because we both had opinions about the other one's core expertise, but we really did have complimentary skill sets on the fundraising side. It didn't take long for me to kind of make the determination that this was not going to be a traditional family owned business, where we were going to try to keep a hundred percent of the equity and just, you know, blood, sweat, tears, and just, you know, try to grow it organically.
1 (11m 58s):
We're this is an IOT product we're in the middle of a smart home revolution. The problem point is way too big. It's billions of dollars a year. And we were going to need a lot of capital if we were going to get the land grab. And what I refer to the land grab is, you know, every home is potentially land for us to grab, to go install a flow device. And I knew already that there were some big public companies that were already looking at this problem. It was too big for people not to take notice.
0 (12m 28s):
Yeah. Let me break in here another second. Cause Fire Nation, just think about this land grab concept for a second. I mean, what's happening with Alexa and Google home right now? Guess what if Alexa wins this land grab, who's going to actually start winning when you want to order something from your smart speaker. Well, obviously Amazon is going to win with Alexa Google when we Google home. So there there's so much money in that. Even in my home here, down in Puerto Rico, I have nest, I have Lu Tron for lights. You know, nest is for my thermometer. I mean my thermostat, you know, I have Dios, which is for my sound system. It's just nuts how quickly and how smart our houses are getting in the land grab is legit. So key Brock and Gabriel.
1 (13m 9s):
Yeah, absolutely. And so just, just playing off of what you just said. I mean, we put ourselves in the category of, this is what you need for your water. Like you have a nest for your thermostat. You have maybe a ring is your front doorbell. You have all these other smart home devices yet. The biggest problem space is actually in water. And here we have a solution that can not only help prevent all catastrophic water damage to your home. It makes the entire home smarter. So we really felt that this was an opportunity that needed, you know, a lot of capital, a lot of resources outside of just me and my dad. So it didn't take long for me to determine that we needed venture backing. And that's a different kind of company that you're growing.
1 (13m 50s):
And one, that's not typically a family business. Right?
0 (13m 53s):
Absolutely. So you guys decided to go out and start making that happen. So what was like the next step? I mean, where did you actually go to take step number one, which should be like, Hey, we need some money or we're looking for some money.
1 (14m 7s):
Yeah. One of my skillsets, I think, and I'm a very curious person and I also don't think I'm a category expert in like anything. So being very curious and also having a network, which is one of the values that are bring to the table. I quickly just started asking people questions. And one conversation led me to another, which got me to some pretty great advisors looking back on it. I was really blessed for example, Jamie Siminoff from ring who just sold to Amazon for a billion dollars. Is that also from LA and happened to be one of my first advisers and investors in my company. I sought out people that knew a lot more than I did about not only raising venture capital, how to build a hardware business, how to build a software business, how to do, you know, business development and working with insurance companies.
1 (14m 60s):
And these conversations just led me to some really great advisors, which was the best place to start. So Jamie Siminoff from ring a gentleman by the name of side immediately up in Sunnyvale, California is one of my advisors. He runs a startup incubator called plug-in play. They made the initial introductions to a lot of great insurance companies that I ended up working very closely with. USAA is one of our investors actually invested in our first round, our, our seed round of capital. So they were one of our first venture investors. And so one really important thing if I was, you know, to be giving advice, here is one, you got to get great advisors. You got to get people who know more than you do and are and are willing to make introductions for you.
1 (15m 46s):
And two, you've got to build a great team because they are really investing what venture capitalists are looking for at that really early stage, which, which is your first round of venture capital is they're looking to invest in a team, even though your product might be a fantastic idea. I think ours wasn't is. And even though you may have great product market fit and whatnot, there are going to be a million challenges that are thrown your way between, you know, the time that you're pitching them. And by the time, hopefully you have some kind of very positive exit from that business where they're actually seeing money back.
0 (16m 19s):
So let me pull you back to that first point though, you said, find great advisors. What would be your best recommendation on how to start that process?
1 (16m 27s):
Just got to start with your own network, you know, look at your LinkedIn, look at where you want to go look at the kind of capital that you need to raise. Not all cash is equal. I think the way that a lot of startups look at it for their first round is they're just trying to get money any which way they can. I challenged myself to really think about who is the best capital for this business. Who's the smart money that's going to not only get my foot in the door with who I need, whether that's on the business development side or the venture capital side or whatnot, or, or just finding talent that I really needed for my business, you know, who was going to be the best investors that were going to help me get to the next level.
1 (17m 12s):
And so having capital is one way of really aligning with very smart people. So all of my advisors, I gave some equity interest in our company, which vests over time, but I also asked them to be investors in the company at the same time. And I gave them favorable terms. And all of my initial advisors were also investors in the company. Now
0 (17m 34s):
I know there's no magic number, but what would you say is a good idea to keep as far as percentage of equity in your own family business? I mean, is it just as simple as saying over 50% or is there actually a better number or is that just not even a really something you can answer?
1 (17m 52s):
It's really something that can answer because all businesses are different, like hardware, businesses, which are, is, is, is very capital intensive. So we will definitely own less than, you know, to 50% of our business. There's no question about what I prefer to own over 50%. Absolutely. But I think it just really depends on the business and how much capital you need and how much momentum you get. You know, how much you can justify raising money at a higher valuation, but the way that I've always processed it as I'm trying to grow the pie and what's good for growing the pie overall, raising the sufficient amount of capital that we need to keep that dream going is what I was focused on. And you know that obviously no one likes a dilution, no one likes not owning, you know, as much as they can of their business.
1 (18m 38s):
But as long as I keep growing that pie, it's going to be worth it for everyone is how I process
0 (18m 43s):
So far, our nation we've been going through just some really important things here when you're starting a business, growing a business, especially if this is a family business, like some things to consider, we have a lot more things we're going to be talking about. And the second half of this interview, we're going to take a second here. We're going to thank our sponsors. We'll be right back. The new year is here. And my guess is that you have big goal set for you in your sales team. Over the coming months from new projects to bringing in more leads a new year can often feel like a totally new start, but let's not forget the most important part, arming your team with the best tools so they can focus on giving your customers the best experience possible. And this starts with getting ahead of the learning curve so that new challenges turn into new ways to grow with new features, dedicated to helping your sales team improve your customer experience.
0 (19m 28s):
HubSpot is on a mission to help millions of companies grow better. Starting with yours. Conversion intelligence tools helps your teams get real-time insight into calls with automatic recording transcription and call analysis. With more visibility into customer conversions, coaching and customer feedback becomes that much easier. Plus easy share meeting links, let customers see availability and allow them to book meetings with you all from the HubSpot platform, which cuts out the endless cycle of scheduling emails. Learn more about how you can transform your customer experience with a HubSpot CRM platform at hubspot.com. So Gabriel we're back. And I want to talk specifically right now about some of the benefits to venture backing as a family business.
0 (20m 9s):
I mean, there are obviously some negatives to it and there are obviously some positive, which is why you went down that road. So let's focus on the pauses right now. Let's talk about the benefits of actually getting an injection of capital into your family startup
1 (20m 22s):
One. I think it makes you much more of a disciplined, right, having really smart investors behind your company. Like we got cross-link capital, who's a great venture capital firm at a Silicon valley. We got, you know, USA, which is just a phenomenal, but insurance carrier and, but financial institution, they really help bring a level of discipline to the company. They, they helped us, you know, set up our business in such a way that we could partner with an enterprise level of accompanies and frankly, that we would be taken seriously as well. I think when I first walked into the room with not only many venture capital firms, but insurance companies, I wanted to work with or retail when it was just me or me and my dad and where this father, son business people, weren't sure whether to take this seriously or not.
1 (21m 12s):
But once we had, you know, household names, financial institutions, venture capital firms that had invested in the company, I think that people started looking at our business differently and realizing that, you know, we were going to take this business to a certain level and that obviously some people had done their due diligence on the company and thought this was worthwhile if they were investing millions of dollars into it. So it really helped to elevate the conversation. It was very helpful for me and my dad as well. I mean, me and my dad are still a father son in the end of the day. So when we were able to bring in sophisticated kind of venture capital into some of the conversations that we were having about directions to take the business, you know, they helped, you know, they helped us process where we want this business to go, you know, but ultimately we still control our board.
1 (22m 0s):
It's our decision, but they, they also acted as great advisors about what we need to do in terms of how to grow the business to a certain level. I also think one other thing, if I can just throw this in there, I think for us, it was a much more conservative way to grow the company. And I know that, you know, a lot of people don't look at venture capital as conservative. Certainly my dad didn't at the beginning either. He was, he was very much against it when we were first having a conversation about this. But here we are a father son team who is investing a tremendous amount of art time, which is our biggest resource into this company. And ultimately if it didn't work out and we didn't have venture capital funding, we would not only be out all of that time, but we would have invested a significant amount of our own money into the business, right.
1 (22m 48s):
That was a huge risk to take. So I think it was more conservative in some ways that we can raise venture capital, pay ourselves. I mean, certainly not, you know, that any kind of a glorious salary, but enough that we can at least cover some of our own personal expenses while we're growing this business. And then if it didn't work out, then yes, we've lost our time. But at the very least, we were covering expenses with the venture capital that we had raised on a personal level. And if it does work out, then there's still going to be plenty of upside for us and our investors. So in that way, I think it's a more conservative way to grow.
0 (23m 23s):
I like how you put that to not a glorious salary because Fire Nation, I've just seen a lot of people have the mindset. You know, I'm going to start a company, I'm going to raise some venture capital and then started paying myself a million dollars a year. And guess what people that are going to invest in your company are not investing so that you can pay yourself a seven figure salary. That's just not happening. They're investing in the company to make sure that that company grows the right way, invest this money the right way, pays his people, the right dollar mounts and a glorious salary will not be one of those things. It's not a glorious salary you want to add.
1 (23m 56s):
It's definitely not. I mean, I may sound a little nasally right now because I'm working very hard on my startup. I travel a lot while I started this company. I had twins there now, but 18 months old and I have a wife. And so, you know, I'm working really hard running a lot of different directions and certainly the amount that I'm paying myself. I'm, I mean, I'm still really just on a personal level. I still operate it like a net loss every month, even with the amount that I pay myself, but it, it's not a conversation that I've chosen to really push on with my board and my partners and stuff, because I really set the bar for the 25 employees that, you know, full-time people that we have working on this project now.
1 (24m 36s):
And, you know, as the CEO, you're also the chief cultural officer of the company. And I want to set the salary bar at such a level as the CEO, that everyone is still very hungry. We have, you know, a eight of a commission structure in place. Everyone that works for the company has stock options and gets, you know, equity for joining. And that's really what we're all working towards. We're really working towards growing that pie.
0 (25m 1s):
So let's get into some more specifics when it comes to venture capital. So let's talk investment size, kind of break down what that means and how you approach that
1 (25m 10s):
Lessons that I learned from my advisors early on is that you always want to raise more than you think that you need. So when I was doing my first round, this is back at the end of 2015, beginning of 2016, I thought that I needed to raise about a million and a half because you know, that was how much I thought was going to carry me to the next phase, the next milestone, where I could raise again, I was wrong. I ended up raising three and a half million dollars in that round. Part of the reason that I did that was because one, I got some really great investors that I wanted to, that I wanted to bring in and have them vested in helping us build this dream. But two, I took the advice of my advisors and always raised more capital than I think that I needed.
1 (25m 54s):
And that was a really great decision. I mean, we ran into longer lead times than we originally expected when we were first developing our product. I wanted to be opportunistic with hiring and to hire the best people that I possibly could. And now I have, you know, my whole support team came from a Tesla. My, my data scientists came from apple, so on and so forth. And it just wouldn't have been able to hire these people if I didn't have the right amount of capital. And by the way, when I said that, you know, to the venture capital instills confidence in people on a business development side, it also instills a lot of confidence from your team. I would not have been able to recruit the kind of people that I brought on to help grow flow without raising the right amount of venture capital, because people do use it as a proxy.
1 (26m 43s):
You know, how much you raise people use as a proxy for how successful you are. It's not true, but it certainly is one of those, you know, indicators that people look towards. It's one
0 (26m 54s):
Of those that sometimes perception can be
1 (26m 57s):
Reality. Absolutely. I mean, when I tell people my, my data scientists, Nick, he happens to be fantastic as a data scientist and an engineer. And excuse me, he happens to be fantastic as a data scientist and just as a human being, he's an amazing person, but you know, people don't care about him as much as they care that he used to work at apple. And that's what sells people. That's what people get excited about.
0 (27m 21s):
Well, I think that leads us into the next point that I do want to get into, which is experience. So we kind of talked about investment size. I know there's maybe no perfect number, but it seems like you went about 30 to 40% more than you initially thought you might need. So that's kind of one thing let's talk about some of that experience factor you're talking about.
1 (27m 39s):
Well, one fundraising is really hard. Anyone that says that fundraising is easy, is lying. You got to have a lot of different conversations, especially if you want to be raising the right money from the right people, all cash is not equal. You really want to try to, you really want to try to find the right investors that share in your vision and you want to celebrate with them when things are going great. And you also, when you fall on to tough times that you guys are going to stay aligned and, you know, be able to have those tough conversations when they do come up. So you got to kiss a lot of frogs before you meet the right folks that you really want to, that you really want to partner with.
1 (28m 19s):
And ultimately that are going to share in your vision. So you got to have thick skin. You're going to get a lot of nos before you get a yes. And then when you do get the, yes, you want to be very careful that you're not just taking, you know, the, yes, you're not just adding that investor to your cap table because you really need the money and you think you just need to move. It's important to stay honest and true to the kind of company that you want to build and make sure you're adding the right people. So just prepare to have thick skin. That's the best advice that I can give
0 (28m 48s):
About designing your patch. You could go into a lot of different explanations and examples. I just want one, give us one thing that we should and can be thinking about when we're designing our pitch.
1 (29m 1s):
I think it goes back to also me being a father, son team, too. It's about telling the story and you know, our story is a family really came together around having leaks in homes and what we suffered through and why this is an important issue for us. Why we have a unique perspective and having the vision for where this is going. I think one of the things that people really miss is a CEO of a company, is it you're the chief storyteller. So you've got to get really good at telling your story and why is this going to be you? Because I think a lot of people watch shark tank. They know that the sharks are going to ask them like what's stopping Bosch or Google or Amazon or general electric or whoever it is like, what's gonna stop them from just getting into this business and squashing you.
1 (29m 46s):
And ultimately, you know, the answer is it's about you and it's about the team and it's about, you know, why you're going to be, you know, the frugal enough and passionate enough and efficient enough with the capital you have and go and, and go get that land grab in, in a way that another company is not going to be able to do again, investors are investing in you more than they're investing in anything else. So being able to tell that story and being able to explain why you're the one that's going to, that's going to take this huge opportunity and go get that market share
0 (30m 19s):
Coronation. You've heard land grab a few times. You have to have that first movers advantage is critical. And once you have it, you can't let it go. And you got to Gabriel and you've, you've run with it. You're currently running with it. As you said, your little nasally, cause you're traveling around, you got, you know, twin 18 month old, you're married. I mean, you just have a lot of stuff going on right now. So let's kind of talk post fundraise, cause you've raised the money. You're paying yourself a salary. I'll be, it's a non glorious one, but you are, you know, getting revenue from, you know, this overall venture capital injection, what happens post fundraise that we really need to know about?
1 (30m 56s):
Well, I think one keeping, keeping contact with your investors is really important. Like I send out a quarterly update to my investors. If your investors are coming and asking you for information, that's probably not a good sign. So it's, it's better to keep them in the loop. But two, you need to immediately be thinking about when your next fundraise is. I know this is a terrible thing and no one wants to think about it because fundraising is so hard.
0 (31m 21s):
Well, it's kind of like when a politician gets elected and they're thinking about the next election. I hate that.
1 (31m 25s):
Yeah. But it's true. You know, one of my advisors said this to me and I hated, I hated hearing it. It was like one of the most painful pieces of advice that I ever got. But there is an element of truth to this is that when you're in the startup business and you're venture backed like your goal as a company is to reach the next milestone. So you can raise more money and you know, it's it, there, there really is some truth to that where, you know, when you raise money, you've now you, you know, you've put together a budget on what you're going to do over the next 12, 18, 24 months, how long you've, you know, budgeted for. But however long that budget is for and what you've sold, your initial investors on, you need to hit those milestones.
1 (32m 8s):
And if you don't, then you may not have yourself in the right position where you can raise money again. And guess what, a hundred percent of the reason why startups fail is because they run out of money. It's not because people just, you know, give up on it. It's because, you know, they were not able to, you know, to keep the lights on a lot of times. So one of the things you have to be thinking about is what are the things that are going to get you, you know, to the next level where you can continue, because now you're dependent on that capital and you have you venture capitalists who want to see, you know, five-axis but 10 X, a hundred X returns on their money. So what are the things that you're going to be able to sell that next group of investors that, you know, you're going to, you're going to see viral growth in this product.
1 (32m 56s):
And so it's tough to think about it's a tough pill to swallow, but it is part of the reality of the situation,
0 (33m 2s):
Fire Nation. That's what we're doing. We're dropping truth bombs here. You know, we're giving you the good, we're giving you the Bowery, giving you the ugly. We're giving you the reality of what this is. So Gabriel, we dropped a ton of value bombs on Fire Nation today. And I don't want to go back over each and every single point. So just kind of maybe pick one thing that you want to make sure our listeners really get as an overall summation from this audio master class and break it down for us.
1 (33m 28s):
Well, I just think, you know, if you're deciding that you want to start a business as a family, you need to have a real heart to heart about the kind of company that you want to grow. How do you envision things going? And sometimes venture capital is the right decision. Sometimes it's not, if you know that there's that land grab opportunity that you, that you really need to get, you know, get out and get it. You know, we'll go get as much market share as you can. Sometimes venture capital is going to be the right answer. It was the right answer for us. Again, there are pros and cons of raising venture capital, but I think some of the pros are it's going to keep you really disciplined as a company to be thinking about the things that are actually going to make a difference in reaching that next milestone and ultimately growing the pie.
1 (34m 11s):
So there's going to be plenty of meat on the bone for all involved. And, and I think it's going to help you attract talent. And ultimately, like I was saying before, in some ways it's a more conservative way to grow your business because you know, the pie, your slice of the pie may not be as big when you go partner with venture capital. But now you got a whole group of very talented, very passionate and very hungry people that are now on your side that can help you open doors, help grow the right team. So ultimately it'll give you a better chance of reaching success without having to dig so much into your own pocket.
0 (34m 48s):
Gabriel here I live in Puerto Rico, you know, every year we go through a couple of months where we're just terrified about the next hurricane coming in. And obviously our worst fears were realized last year when hurricane Maria ripped through and did a lot of damage to the house. And I can tell you water damage was by far the number one piece of damage that we had on this entire island. People are still suffering from it because what happens with water damage, then there's mold and this happens and you know, water always finds a way through. So this is something that I can tell you that my entire island of Puerto Rico deals with on a consistent basis. You know, at the very least we have a massive rainy season and you know, things are happening, et cetera, et cetera.
0 (35m 28s):
So I personally know that this is going to fill a massive void for a lot of people around the world, because of all the things you talked about at the beginning about how this is just such a more common, a thing that the damages houses then fire and theft, you know, five times of those combined it's crazy numbers. So maybe in this kind of final little summation part here, share with us a little bit more about flow technologies and how, if we're interested in learning more about this company, we can,
1 (35m 53s):
John, just one thing I want to correct your listeners on I'm sorry if I misstated this earlier, but it's actually twice as likely as firing theft combined, it's five times more likely than fire or theft. So, so twice as likely as those combined. So we'll just have the record straight on. And just one more thing to set the record straight on as well. Cause I know you started talking a lot about weather related water damage. So flow technologies can't prevent, you know, a hurricane coming and hitting the island. And
0 (36m 22s):
I can't be like, y'all not this way, Maria.
1 (36m 26s):
Yeah, exactly. But what we, what we can help prevent is if there's any kind of a rupture to that main water supply line, if there's any vulnerabilities in it as a result of high pressure freezing temperatures or just, you know, things on the pipe start to get corroded. And eventually they burst. Those are the kinds of leaks that we find very early on. Those are the kinds of water damage claims that we help avoid. So if you're interested in learning more about flow technologies, visit, meetflo.com, that's M E E T F L O.com. There you'll have a whole host of information about what makes flow technologies, the best water monitoring and control technology on the market.
1 (37m 7s):
And also check with your local water utility and check with your homeowners insurance company. Cause you may be entitled to rebates and insurance discounts off of your homeowners insurance premium for having a flow device. You can get up to 10% from your homeowners insurance company, depending on what carrier you have and what state you live in. So, but check with your carrier. There are some homes like my brother-in-law got $500 back his first year for having a float device. So it's pretty awesome.
0 (37m 38s):
I would say growing up in new England, I mean, we had burst pipes all the time and those winters, you know, being down here in Puerto Rico with things like the hurricane and just the salt water that gets poured into your house and things like that, the corrosion of pipes, I mean, that's the things that's happening all the time as well. So there's a lot of opportunities here to look into. So one more time, Gabriel, what was that URL?
1 (37m 57s):
meetflo.com. So M E E T F L O. Fire Nation. You're the average of the five people you spend the most time with. You've been hanging out with GH and JLD today. So keep up the heat and head over to EOFire.com type a Gabriel in the search bar in the show notes page for this entire episode will pop up with links to everything that we've been talking about today. We're talking timestamps, we're talking the best show notes in the biz. Gabriel, thank you for sharing your truth, your experience, your knowledge with Fire Nation today for that brother, we salute you and we'll catch you on the flip side.
1 (38m 33s):
John had a, I had a great time. Hey, Fire Nation. Hope you enjoyed our chats with Gabriel today. And if you're ready to rock your podcast, share your voice, your message, your mission with the world. Well, I got a completely free training for you. That's dope. It's called freepodcastcourse.com. I know I made the URL really difficult and really confusing freepodcastcourse.com. Fire Nation, I'll see you there. The My First Million podcast features famous guests, discusses how companies made their first million and brainstorms new business ideas based on the hottest trends and opportunities in the marketplace. One recent app was all about how venture capitalists make money.
0 (39m 13s):
Listen to My First Million, wherever you get your podcasts.
Business Transcription provided by GMR Transcription Services
1) The Common Path to Uncommon Success: JLD’s 1st traditionally published book! Over 3000 interviews with the world’s most successful Entrepreneurs compiled into a 17-step roadmap to financial freedom and fulfillment!
2) Free Podcast Course: Learn from JLD how to create and launch your podcast!
3) Podcasters’ Paradise: The #1 podcasting community in the world!