Unlocking the Outdoors: A Q&A with Co-Founder & CEO of Outdoorsy, Jeff Cavins
Outdoorsy is an excellent example of identifying product-market fit. When did you know you had a great idea?
After running 6 companies (3 public and 3 private), I wanted to look towards the outdoors as I was fascinated by outdoor lifestyles and wanted to get away from a world of conference rooms, fluorescent lights and endless management meetings. I met my partner, Jen Young, at a board meeting in Vancouver, BC and she had the same idea. We started to research the camping industry and the RV market but data was spotty and scattered. So, Jen and I (we had started dating in 2014) decided to travel across America in an RV to do our own investment thesis on the outdoor market.
We started reading everything we could about marketplaces. We crisscrossed America 7 days a week for 7.5 months, living in our RV. We conducted over 1,200 in person interviews with people that we met along the way. My favorite was a Navajo Chief that I interviewed outside of Taos, New Mexico. I met him in a coffee shop and spent 2 hours with him learning about his culture, travel in the region and the fact that many Navajo owned campers and RVs. They were some of our first listers on the platform and we were featured on an NBC on-air segment in Albuquerque.
What we learned on the road for 7.5 months was that there was a multi-billion dollar industry hidden before our very eyes. There was also a youth movement, but it was happening on Craigslist. We knew we had something and that users loved RV and Campervan travel, but there was no marketplace to support the new consumer love of this form of travel.
What was the hardest part of launching Outdoorsy? What challenges are you facing today?
I could go on and on about how hard this was and still is. It's excruciatingly difficult. Insurance was and remains the biggest barrier. This asset class (RV, Travel Trailer, MotorCoach, Campervan, Motorhome) features language in insurance statutes, filings, and policies that prohibit commercial activity and strongly prohibit marketplace activity. While we did secure episodic insurance, we found that the bleeding-from-the-neck problem for our users and consumers in general is that they need a new insurance product to cover their vehicles and their businesses on an annual basis. We have been working on this for some time now and we are close to launching our new Insure-tech platform to solve this problem.
When you first launched your company, you weren’t seeking venture capital. Why not?
I wanted to preserve the equity for the founders and employees and also maintain the level of control that I would need to steer the company into directions that I understood well, but are generally not understood in the venture market. It was less about not taking VC money and more about finding the right investors that shared our view and who would partner with management. We turned down 4 term sheets and then found the right group of investors who shared our vision and who supported the founders' desire to control the business. It's a very nuanced set of problems that need to be solved and control was important to us.
What made you eventually decide to pursue venture capital?
I was funding the company myself and through a few high net worth friends but knew that I would require more capital to support our growth. We started to grow rapidly and of course, growth requires cash. I had enough capital available to me through my network to continue but then I met James Currier, Gigi Levy, Alexei Andreev, Doug Renert, Anthony Lee and John Avirett. They shared our vision and were excited about where we were going. It made sense to involve them as investors in our adventure.
What should founders look for in a VC? What are the signs of a potentially fruitful partnership vs. what pitfalls should be avoided?
This answer depends on the entrepreneur. Some are younger and need paternal oversight. Others have more experience and need a partner mentality in their investor. I fell into the latter camp and as such, I was looking for mature investors who aligned with me at a partner level, given that I have more experience today than I did when I was a first time CEO and needed a different kind of investor. I think the most important thing to look for is a long term fund and a VC investing out of a long fund. A 3 year or 5 year fund would have been the wrong thing for us.
Our marketplace will evolve over many years and we will see turns and changes in the business. An investor with a long view will operate and make decisions differently than one who is investing out of a short term fund or a short mindset. Enduring brands take years to build and they require drive and innovation but also some patience and flexibility. Fund duration and individual investor vision and style contributed to why I work with our current group of investors - Altos, Greenspring, Autotech, Tandem, and Aviva.
Tell us about partnerships… How have partnerships helped you grow your company? What kind of partnerships are important for a startup?
Partnerships can be helpful. Partnerships are vital. We have many partnerships ranging from Liberty Mutual, Aviva, Mercedes, AON, KOA, Booze Allen, ELS, Apollo (Lloyd’s of London syndicate), Allstate, Safeco, HIPPO, Vacation Renter and many more. Partnerships are key to extending the Outdoorsy ecosystem and have played an important role in our reach and growth. We are also mindful of the fact that reliance on slow moving institutions that we do not control requires management, proper planning and expectation setting. Partnerships require management and active communication with good alignment on goals and objectives. When these come together and work well, a speed effect can happen in the business. We are always on the lookout for those partnerships that help create a sling-shot effect in the progress of our business. When we land one, we nurture with a high degree of attention and focus.
Tell us about your partnership with Autotech. How did the partnership begin?
Autotech has always been mindful of what we are capable of attending to in the form of activity, introductions and networking opportunities. In particular, Autotech has worked consistently toward our best interests. We find it valuable to work with Autotech on programs that we consider and share with Alexei and Quin to see how they can help us. In every case, Autotech has been tireless in efforts to help understand what we are doing and how they can help. We greatly appreciate and value the relationship with Autotech.
When it came to our Vehicle Purchase Program, (VPP), Autotech made introductions to Mercedes Benz, which was very helpful. We have been introduced to Autotech portfolio companies to brainstorm working relationships and as well as Autotech LPs to brainstorm financing programs for our VPP. This is an ongoing project and continues to be an important component to our growth strategy – the goal of high value, supply arbitrage.
What’s the best mistake you ever made? (i.e. something that didn’t go according to plan that resulted in a valuable lesson learned)
My list of mistakes is long and I'll certainly make more. When you push hard and work on innovation, you are going to make mistakes. No crystal ball or thesis is going to be perfect. However, the mistakes I have made means that I am not starting over from scratch... I am starting over from experience. Learning from mistakes is the key. It requires eliminating ego and working to be vulnerable. Not always easy and entrepreneurs can and should be fixed on their vision, but one must blend firmness of vision with a set of open ears and a willingness to be wrong. As I look back over my career, the number one mistake that I have learned to not make, but I did make this early in my career is to maintain strong fiscal discipline, even in times of high growth. One must manage cash as if it's the only oxygen the company has. Too many CEOs throttle up, burn cash as they chase growth and then when they hit a speed bump, and almost all companies will hit one or many, they find themselves all of the sudden, in trouble. There will always be resets and market dynamics that get in your way. Cash in binary. you either have it or you don't.. Far too many entrepreneurs waste cash and they get in trouble. One must know when to apply cash to grow, know your burn, know your runway and always budget more time for fundraising than you think by a factor of at least 2X.
Are there good resources that you subscribe to or follow to keep up to date on what’s happening at the intersection of technology and mobility?
I read as much as I can get my hands on. I read for 2 hrs every night and spend a good amount of my weekends reading research and articles on marketplaces and fintech markets. I am a big fan of Rachel Botsman and I read anything published by Bill Gurley (Benchmark) and Jeff Bezos. I study other consumer marketplaces as well as my competitors. I talk to my competitors in order to learn their vulnerabilities. I have been reading insure-tech research reports and anything on insure-techs that is published by Deloitte, E&Y. Many of these reports speak specifically to mobility and the future of risk underwriting (based on real time data) in the mobility space.