November 2, 2021 BACK
Presenting This Month:
Featured in this issue:
Roy LaManna, Founder of Vydia
Tot Squad founder and CEO Jennifer Beall Saxton
John Keatley, Membership Chair for Pasadena Angels
Welcome to the November 2021 issue of the Pasadena Angels newsletter. Below the three companies presenting on Wednesday you'll find a profile of a baby services marketplace, a video management platform founder, and a payment platform guru.
Startups Presenting Wed, Nov 3
COMPANY: Readlee https://www.readlee.com/
Presenter: Drew Madson
Pasadena Angels' Deal Lead: David Mandel and Mike Krebs
Readlee augments the parent, teacher and school’s role in reading instruction by: a) Generating and analyzing data trends with industry leading speech AI. b) Engaging students with the latest in read-aloud research and driving achievement. c) Providing access to authentic content, anywhere, anytime. The product led growth model that has expanded to reach over 1,000 schools.
COMPANY: Revi Technologies https://getrevi.com/#/
Presenter: Eugene Johnson
Pasadena Angels' Deal Lead: Kiem Tjong
Revi enables a seamless experience that deepens customer engagement with the local businesses they love today and will love in the future. Our consumer online experience combined with an on-premise Revi experience, creates vibrant local ecosystems allowing customers to connect, support, and be rewarded by their favorite businesses.
COMPANY: Sanity Desk https://sanitydesk.com/
Presenter: Samuel Cook
Pasadena Angels' Deal Leads: Stender Sweeney and Janice Orlando
Sanity Desk helps new business owners build and launch their entire business online in one place - website, marketing automation, sales CRM, support desk, team communication tools. They do this with a guided onboarding process where we help business owners map out, plan, and build their entire website and IT infrastructure and then support them with a subscription plan.
June: Ready, Set, Food, Dr. Mirianas Chachisvilis and Joseph Pitruzzelli
September: Luk Network, Brandon Cavalier and Nancy Dandridge
October: Dr. Chorom Pak of LynxBio and former president Al Schneider
Founder Profile - Roy LaManna, CEO of Vydia
Roy LaManna was minding his own marketing business in 2013 when a $100M idea occurred to him. Being modest, it was dressed up like an opportunity to pay his utility bill. He had a digital marketing company, Trendsetter, and he helped video creators get their content in front of decision makers at places like MTV. In an effort to gather more video content, he created a website for music video submissions. It was just a modest homemade WordPress site that he hoped could generate $200 per month. He remembers clicking “publish,” going upstairs to brush his teeth, and checking back right before bed. In 30 minutes, he’d hit his monthly goal. Within a year, he was booking $60,000 per month.
But, the site was breaking. It wasn’t built for that kind of scale. Roy saw the opportunity: raise $3M, build out the site, and turn this into a serious business. But he also knew that it would take months and require tens of thousands of dollars to pursue that option. He already had a successful digital marketing business. In the end, he realized that he couldn’t live with himself if all he had was a story that he had a good idea but didn’t try to make it work.
So, he hired a consultant, recruited a co-founder, and started getting ready for the fundraising. In all honesty - and he would tell you himself - he was completely naive about the process. He spent $75,000 and six months getting ready. Then stumbled through a series of pitch sessions until he had almost run out of investors to turn off.
Mentally, Roy had accepted that he was down to his last pitch. He trekked to Pasadena and pitched the Pasadena Angels. Somehow, he was invited back to a second round. That’s when Roy met Richard Chino, long time member of the Pasadena Angels. Richard sat down and spent some time with Roy. He helped Roy polish his presentation and tell his story. Richard came to understand how deeply Roy knew the business. Richard’s help enabled Roy to make a better pitch, but Richard’s endorsement gave Roy the credibility that he needed with the group. The Pasadena Angels eventually signed on and Roy was in business. He had only a vague notion of what was next, but he knew that he would figure it out… because he had to.
He came up a little short of his funding goal, raising about $300K of the $3M he targeted. He learned to take baby steps. He had laid out some milestones in his pitch, and seven months later, he returned to the Pasadena Angels with a presentation that included one key page: “Milestones Met,” which listed the five commitments he had made and how he had met or exceeded each one. That was the clincher. He raised another $400K.
Around that time, Vydia achieved profitability. Staff grew. At each stage, Roy faced different challenges. Initially, he had grand visions for the product. Then he would discover that they were beautiful visions for a distant future, but in the immediate future, they needed an MVP that they could realistically achieve in weeks, not years. Roy learned to take his natural instinct to think five years ahead and force himself to get practical and tactical about short term objectives.
He likes to think of building the product like building a house in phases. It would be nice to build the 6,000 square foot mansion all at once, but you can’t. So, you design a functional 2,000 square foot house, but you do it in such a way as to minimize demolition and simplify addition. Add rooms in phases, and you can get to that 6,000 square foot mansion, if you’re patient.
Roy’s best advice for new founders is to avoid the trap of building a company in which they’re the smartest person in the room and they teach everyone their way of thinking. The end of that path is a company that can’t go any farther than the founder’s potential. If instead the founder hires people with complementary skills and lots of potential of their own, they can create something larger than themselves that will outlast them. And, that’s Roy’s self-test: would this business survive and thrive without me?
Vydia employs 70 people and is approaching a $100M valuation. I’d say that things look promising.
Company Profile - Tot Squad and Jennifer Beall Saxton
Launching a startup is a challenging and risky proposition, so Jennifer Beall Saxton has gone with the “booster rocket launch approach.” In this approach, you launch a predecessor startup, grow it successfully for 10 years, and then use that as the launch vehicle to boost your “second stage launch vehicle.”
Jen started in the baby business 11 years ago. At the time, she had no babies of her own, and no immediate prospects for any. She just had a winning business plan to be the “Geek Squad” for car seats. “I’m pretty sure “Seat Geek” was already taken, so “Tot Squad” became the place to get your car seat or stroller installed, repaired or cleaned”. By 2018, Tot Squad was generating cash flow through nationwide operations with Amazon.com and had a pilot kiosk inside BuyBuyBaby in NYC.
Just as Jen was contemplating expanding the pilot, BuyBuyBaby came to the table and proposed going big: expanding to 30 stores in 10 cities in the next 60 days. Jen was 9 months pregnant and needed to raise a Series A round at the same time. There was no way all those things were going to happen. For sure, the baby was going to be delivered. The other two were not as certain. But her team hit their goals for the expansion, and Tot Squad was on its way.
When Jen returned from maternity leave, she realized that she needed more help to navigate parenthood. New moms need a lot of support, and these days there are gig workers who can fill that need, from lactation consulting to sleep consulting and other services that help modern families who often don’t have lots of or live near relatives that they can ask for help. She saw an opportunity to expand Tot Squad to offer more services by matching customers with service providers.
Thus, Tot Squad 2.0 was born (not the official name - officially, it’s still Tot Squad). Jen reached out to her network, which was extensive after 10 years of navigating the startup world in the baby sector. After meticulous research and many conversations with industry experts, Jen decided to sell the business. In January 2020 she had four offers to buy the existing business of Tot Squad - all except the car seat installation business which she wanted to keep.
She was trading an existing business that she had built with her own hands and know-how, one that was thriving and growing, for a budding marketplace business and the capital to start a whole new company. This one would be a tech company, which presented a totally different set of challenges. Instead of hiring hourly workers and training them to do physical labor of car seat cleaning, she would be hiring tech workers, building MVPs and managing sprints. The proceeds from the sale of the existing car seat cleaning and repair business to BabyQuip would fund the new startup.
Unless COVID blew the whole thing up. By early March 2020, Jen was wearing a path on her tile floor trying to get the deal to close. Her buyer was a strategic partner: they were big in baby gear rentals in the travel sector: amusement parks and vacation rentals. There was a lot of uncertainty in the travel sector right on the heels of a global pandemic. Her board called her and said, “Do whatever it takes to close this deal this week.”
It closed, and the new Tot Squad was funded and cleared to pursue its marketplace business: matching providers of consulting services to new moms. And, Tot Squad had some aces in the hole. Jen had lined up retailers like Walmart and Amazon to make Tot Squad their provider of lactation, sleep, nutrition and car seat services and to pair them with related product sales. Walmart would pair Tot Squad’s services with breast pumps, car seats and formula. It doesn’t get any better than Walmart and Amazon wanting to provide your service… except if Target comes calling, too, which they did!
And then four days after the divestiture, everyone shut down their services businesses. Amazon’s sophisticated system of vetting providers and then paying them based on a location-tagged selfie taken at the customer’s location was null and void in a COVID lockdown environment. Walmart also shut down services due to COVID. Revenue went to zero. Tot Squad had furloughs. In some ways Jen was back to square one.
But, she wasn’t entirely starting from scratch. She had years of experience and network in the baby sector as a founder and CEO of a startup. She had an existing marketplace business - the car seat installation business that she kept. She had relationships with Amazon and Walmart for distribution. She had suppliers. And, she had a runway, so she went to work building the marketplace.
Now, she has major brands that want to include Tot Squad in their product offering. Kimberly-Clark called and wants to include Tot Squad’s sleep services as part of a major omni-channel activation for Huggies at Walmart. Abbott’s Similac has leaned on Tot Squad consultants for content related to their brand.
This fall Jen plans to raise another $3-5M to upgrade the tech platform for scalability and recruit more suppliers as the market grows. Walmart has turned on their services business, and Amazon will follow suit, eventually. It’s still early in the maturation of the market for baby-related services, but Tot Squad has the right distribution partners and great founder-market fit.
Member Profile - John Keatley on the Journey of Entrepreneurship
John Keatley started in Pasadena. He’s lived in New Jersey and Massachusetts, and he’s even gotten as far away as Sweden, but he hasn’t been able to achieve escape velocity, which is why he’s back in Pasadena and planning to stay. It’s where he headquartered his latest venture, Scratchpay, a patient financing solution. It’s where he and his family have chosen to live. And, it’s where he hopes to help foster a vibrant economy and community, at least in part through the Pasadena Angels.
John’s experience with payment platforms is deep. Scratchpay is his third startup in the sector. His first was Green Dot, back in the early 2000s. John called the founder when the company was young - no more than 25 employees - and asked him what he needed help with. A year later, John was the CFO, where he enjoyed a wild ride. Green Dot grew up, added major clients like Walmart, Walgreens and CVS, and then went public on the NYSE.
That role was when John first crossed paths with the Pasadena Angels. Sally DeWitt was an investor with Green Dot. Mike Moritz, aka Sir Michael Moritz of Sequoia Capital, was also a board member, and he introduced John to Klarna, which is headquartered in Stockholm, Sweden. You might think that Stockholm was out of the question for a person deeply in love with Pasadena, California, but then again, John had visited Sweden and met his wife there. Thanks to her, he speaks Swedish, so Klarna was very much in the question. The family moved to Stockholm for a few years where John was Klarna’s CFO.
After moving back to Pasadena, John founded a company somewhat inspired by Klarna. Scratchpay is now six years old with more than 100 employees. Where Klarna offers buy-now, pay-later online, Scratchpay focused the concept on an underserved market: veterinary services (and now dental, optometry and other medical services). Scratchpay has some similarities to Carpay, founded by Brandon Cavalier, which is the used car payment platform described in the September newsletter, and in which John is an investor.
Larry Uhl introduced John to the Pasadena Angels, and John quickly recruited his parents to join: Jean and Jim Keatley. Possibly recognizing his zeal and affinity for the role, Pasadena Angels made John the membership chair.
John’s experience with angel investing is unbalanced, having almost two decades of experience being on the investment side, and only a couple years on the investor side. But he’s developed something of a philosophy. First, focus on technology, but not to the exclusion of wine (one of his investments is a canned wine business). Second, certainly do your homework, but stay humble and recognize that there is so much that isn’t knowable. Third, diversify. Fourth, crowdsource knowledge, which is one of the elements that PA provides.
John loves the journey of entrepreneurship. But, as a CEO, he can only revel in one journey at a time. As an investor, he can partake in several... maybe a dozen... maybe eventually several dozen. Angel investing is, in part, a way to vicariously enjoy the thrill of the startup. Role models like Mike Moritz and John’s mom Jean, who was an equity analyst in the 1960s, have been an inspiration to him in his work. They demonstrated that people can overcome obstacles and have a much bigger impact than even they imagined.
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Dave de Csepel
Chairman, Pasadena Angels