He fought Al Qaeda in Iraq, turned down $250K at McKinsey—& built a $150M+ ARR unicorn. Here’s how it happened: | Blake Hall, Founder of ID.me

"I was technically homeless at the time. I was sleeping on my buddy's couch. I had declined $250,000/ year at McKinsey... I had no idea what I was doing." Now, Blake has $150M in ARR, growing 30% per year, with 80% gross margins. He's raised $400M and his startup ID.me is worth over $1B.

This is the story of how pivoted for a Groupon-like model to an identity verification platform. Blake talks about how he raised the initial round, closed the first few enterprise contracts, and why he thinks finding product-market fit is more of a science than most founders think.

After his pivot, ID.me doubled its user base every year. Now, over 40% of Americans have an ID.me account.

Why you should listen
•Learn how even successful founders are often much closer to failure than you'd expect
•How to get credibility as a founder and close enterprise deals.
•Why fear of failure can be a powerful motivator if used constructively.
•How to use a niche market to quickly find product-market fit
•Why staying close to customers is the best way to pivot into the right problem/solution set.

Keywords
ID.me, military, tech founder, product-market fit, startup, business model, capital raising, mentorship, scientific approach, user base, revenue growth

Timestamps:
(00:00:00) Intro
(00:01:56) The Origin of ID.me
(00:04:44) The Two Parts of Credibility
(00:11:16) To Win Big, Start Small 
(00:14:53) Fear of Failure Can Be Positive
(00:20:54) Paypal for Identity
(00:23:59) Moving to DC and Raising 500k
(00:27:53) Belief in the Person Over the Business Model
(00:30:55) Pivoting to Identity Wallets
(00:41:07) The first big contract: Under Armour
(00:48:06) Getting to a Million
(00:49:39) One Piece of Advice

Chapters

• 1:56 The Origin of ID.me
• 4:44 The Two Parts of Credibility
• 11:16 To win big, start small.
• 14:53 Fear of Failure Can Be Positive
• 20:54 Paypal for Identity
• 23:59 Moving to DC and Raising 500k
• 27:53 Belief in the Person Over the Business Model
• 30:55 Pivoting to Identity Wallets
• 41:07 The first big contract: Under Armour
• 48:06 Getting to a Million
• 49:39 One Piece of Advice

Transcript

Blake Hall (00:00.046)

I was technically homeless at the time. I was sleeping on my rugby buddies couch. I had declined a quarter of a million dollars a year, give or take at McKinsey to pay myself $48 ,000. Had no idea what I was doing. I was literally talking to myself on the couch and being like, good job, Blake. Graduated HBS, had an offer from the New York Yankees of management consultant. Said no, to start a tech company when you are not technical, awesome, and have no business experience.

Pablo Sruga (00:29)
 Did you think about taking it? Did you think about going back during that time?

Blake Hall (00:30)

Yeah, absolutely. Absolutely. But I couldn't like combat just changed me. If I have one superpower as a founder, it's the ability to learn and to be really clear on.. I understand how people tick. I know how to make them feel cared about and know how to communicate with them. I know how to lead them through adversity towards pursuit of a purpose is bigger than themselves. Military gave me that.

We have 130 million users. We signed up half of America now. Over 150 million in ARR. The business is growing at over 30 % year -over -year. Our gross margins will push through 80%. .

Pablo Srugo (01:06)

Welcome to the Product Market Fit Show, brought to you by Mistral, a SeatStage firm based in Canada. I'm Pablo. I'm a founder turned VC. My goal is to help early stage founders like you find product market fit.
 Well, Blake, welcome to the show. 
 
 

Blake Hall (01:21)

Thanks, Pablo. Thanks for having me on. 

Pablo Srugo (1:22) 

So I'm looking at your background. I mean, it's quite unique. You were actually, I mean, you were in the army before becoming a founder and then kind of your MBA. And then you've been since 2010. So I guess it's been a 14 year journey for you, which, you know, we like to think in the world of startups, things just happen. They explode super fast. It's just never, it's never that way. It's always way longer than you think. But anyways, let's maybe start at the beginning. Like I'm really curious about the origin story of IDME and maybe even just how you transitioned, right? From like being in the army to all of a sudden, you know, being a tech founder. 

Blake Hall (1:58) 

Yeah. I mean, the lawn mowing business, lifeguard, army ranger, and now I founded and am the CEO of a tech unicorn. Incredible. The military was transformational for me. You know, it's like being captain of a sports team. I had scouts and snipers and recon platoon and spent 15 months in Iraq in 2006, 2007, running down largely Al Qaeda leadership and some of the Quds proxies, which is the Iranian special forces that were operating over in the country. And I learned a lot about signal intelligence. I learned a lot about leadership. I learned a lot about iteration and adaptation and how a team that has a lot of raw potential when it's facing a novel problem set.

is pretty inefficient when it starts, but if you just keep getting a little bit better every day, it's just remarkable what you can achieve over time. After I got back from Iraq, I went to Harvard Business School and was really just trying to get my life together. I lost some friends that were really dear to me in combat. I'd faced my own mortality and had carried the lives of 32 men with me every day. I'd met their wives and their kids in some cases, their parents.

just to process what I'd been through. And honestly, it was, I'm so grateful to God that I brought everyone home. I never had to experience what some of my friends went through in terms of losing a soldier that they led. But I was looking for that same sense of purpose in my life. And after a summer at McKinsey, where I love the people, I just didn't feel the same sense of intrinsic satisfaction that I felt when serving. I realized there was this huge problem impacting military families where...

The whole country kind of wanted to wrap their arms around the military, whether it was retailers or nonprofit government programs. And obviously, military families wanted to access those programs, but they weren't available online because nobody could verify that that community was or members of that community were actually part of it. And obviously, a lot changed from that initial insight, even how we first started as a prototype in the early days. But that's the genesis of the whole thing.

Pablo Sruga (04:08) 

I have, I have a bunch of questions, but I'm going to go off tangent a little bit. Like the first thing is just on, you know, having been in the military and then being a tech founder, you hear, for example, I was listening to podcasts yesterday and they're talking about, we want to hire Navy SEALs, right? And then you hear people talking about like, yeah, we're going to battle. Like we're going to, like, you hear all these kinds of words translate over and I'm curious, you actually haven't been on both sides. Like do things translate over? Is there actually any, like, I'm sure everything helps you, you know, things you learn help you later, but like,

It's obviously very different. Do you feel there any like real similarities between what you have to do to get a tech startup off the ground and the sort of things you're learning and doing, you know, actually in the military? 

Blake Hall (04:44) 

I think that question is a fantastic one because it goes to the heart of credibility. Credibility has two parts to it. One are your skills and your experiences and your credentials that when somebody speaks on a given topic, you have to have that

basis of whatever it is that you're speaking from where people go, yeah, like Pablo is super smart on that topic. Also the self -awareness and the vulnerability, and this is the other part of credibility, which is vulnerability and self -awareness to know when you're not expert on a topic. If I have one superpower as a founder, it's the ability to learn and to be really clear on, I understand how people tick. I know how to make them feel cared about and know how to communicate with them. I know how to lead them through adversity.

towards pursuit of a purpose that's bigger than themselves. Military gave me that. When you think about the raw skill that you need though, I had some of the, I didn't realize at the time, I had some of the technical foundation from what I'd done over in Iraq, learning about how telecom networks operate and some things that were associated with it. But when we were first going out to raise, there was a VC that asked me, you know, are you guys using OAuth or SAML? And I didn't know the difference between the two. I remember my face getting like bright red. This is a serious venture capital firm asked me one of the most basic questions about federated identity. And I had no idea. And so part of the feedback loop is, wow, you want to raise millions of dollars, you don't even know one of the very basic concepts of authentication, that can never happen again. And so you really have to feel that and feel that in a way where you have a growth mindset to say, I then went out and researched

everything about OAuth and SAML 2 .0 and OpenID Connect. And I got really deep into even the origins of the space and how, while the standards community was trying to figure out what it should be, Facebook just kind of came in and said, it's going to be OAuth for a social login and OAuth dominated. And so as long as you take failure and adversity as a great moment for learning, it really is about getting enough reps where you can be credible on a subject. And today I will walk into CIOs and CTOs and I'll help.

explain how the market fits together, how their solutions work, what they do and what they don't do. And I'm enormously proud of that because 14 years ago, I didn't have any of that. And it was just a lot of learning and failure along the way that led to the point where we're actually like shaping and creating a new category in the market for authentication and digital wallets. 

Pablo Srugo (07:16) 

What about the Harvard MBA? Like that's another one that people often talk about, like MBAs are. I mean, you've got, I think, the whole spectrum. It depends on what you want to do. But in tech startup land, a lot of people kind of, I know that they look down on MBAs, but they feel like they're superfluous, like not really necessary. Do you feel like that gave you an edge, especially when you talk about credibility and in the sort of space that you were operating? 

Blake Hall (07:36) 

Everything is useful for sure. And I think people tend to be dismissive of domains of expertise that are outside their own and...

For all of your listeners, I'd be really cautionary. That's the mark of insecurity and of ego that's gonna be really destructive. That's a good point. My standpoint has always been be aware of how much you don't know and somebody always almost has something valuable to offer and you wanna listen for that because if you're just in your own echo chamber, you'll miss things. So what I loved, I was in economics and American history, double major undergrad. There is a pattern to how markets develop. Mark Twain had this quote, the history doesn't repeat itself but it...

often rhymes. And so once you kind of see these patterns, you can begin to be able to predict how like a newer market is going to evolve. And that could be like looking at how Henry Ford, you know, did the Model T for automobiles. And then Alfred Sleut at GM came along and then kicked Ford's butt for two decades by personalizing the market. And you can kind of look at you go, yeah, like Facebook and Friendster in MySpace. And now you've got Snapchat and TikTok and X that

You have these initial validations of the market on a use case, but then it typically like explodes and personalizes in phase two, ATMs and Visa and MasterCard as far as like getting rid of digitizing cash and making payments consumer centric so that in digital so that you don't have to spend as much time in line when you're checking out. And once you're able to understand those patterns, I think that can be enormously helpful.

But I think there's diminishing marginal returns that ultimately if you're going to be a founder of a larger company, you have to be a generalist, but you also have to have credibility that is based in an area of core expertise. So I think it was Brian Armstrong at Coinbase here at this great post about there's like four archetypes of CEOs. One is like a sales and marketing CEO. And I think he used like Mark Benioff as a great example of, you know, he can be super successful.

technical CEO like Zuckerberg at Metta, an operations CEO like Kalanick at Uber. And then you can have a design and product CEO like Brian Chesky at Airbnb. All four archetypes, obviously enormously successful as CEOs. So they have one area of domain expertise. For me, my area of domain expertise is product and product marketing. And what makes me really successful when I talk to very, you know, CIOs and CTOs, very large organizations is that my expertise on the market makes me credible.

that makes them trust me. And as we walk through it, they're ultimately, whatever that relationship is, is founded in trust based on the fact that we're going to deliver on what we said we're going to do because there's enough that we've shown them for how the system connects, they believe in that it works. So back to your point, I mean, I think it was enormously helpful for me in the context of needing just some quiet in my life to process combat. I went, I hung out with some of the smartest people in the world.

for two years. And I took a lot from that. I don't think I would have wanted to stay there longer than two years because you need to go out and acquire real skill and domain expertise. And that's what I've done as a founder, you know, after some of those like tough conversations, like the one we just talked about.

Pablo Srugo (10:56) 

So take me back, I mean, to 2010, like the high level problem you identify around, you know, veteran families, military families accessing a lot of the help that's out there. I guess I'm curious, like, what was the specific problem? Was it a problem of discovery of not even knowing what's out there or was it really this problem of proving that you should have access to it, which is, you know, what ultimately you're after with the, with the IDs. 

Blake Hall (11:16) 

So first had no idea what I was doing. and so, because, you know, you were starting with the end here of like running, we have 130 million users, we signed the path of America now, but at the beginning had no clue at all what I was doing in the spirit of, you know, how do markets develop?

Facebook had come out of Harvard, you know, it was just for the IVs and then for students. Pinterest was just for Midwestern moms. Uber started, you know, with affluent riders and black car drivers. And so I thought that maybe the opportunity initially was to create a more trusted version of Craigslist. Military families move twice as frequently as the typical American family. Craigslist actually didn't cover a lot of those communities. And I was like, huh, maybe, maybe if you could create a more trusted version for like moving specifically as an entry use case that you could then

expand from military to students who also move quite frequently. And then that could become the foundation to build a mass market product that disrupts Craigslist the same way that you had these very targeted market entry strategies by some of the biggest companies in the world and Facebook, Pinterest and Uber. 

Pablo Srugo (12:26) 

So for you to be clear, like military families were, you were really thinking about it as just a wedge, just a way to get in and what's, what are some products that you could tailor to them, but then that would expand to everybody else, like, like Facebook, et cetera. 

Blake Hall (12:32) 

That's it.

like had read a lot of Paul Graham and the paradox. The paradox here is that in order to win big, you have to focus small. And Jeff Moore has done a lot of research on this too, with like crossing the chasm, your early evangelists, your early adopters. I just had the good fortune to be on Simon Sinek's podcast a couple of months ago. You know, he, what he talked about a lot is that whoever your early evangelists and early adopters are, they will always be the loyalists and the fanatics and the advocates for your brand.

And I just found that to be really interesting that even as you build this mass market product, the core of who the brand is is still always anchored in those initial segments that get you going, which was not something that I had heard before even just a few weeks ago. So always learning along the journey and amazing to get tidbits like that. But it was just as a wedge and I wanted to help the community.

But I found two things. In order to solve the kind of double -sided market problem that you need enough supply to get demand and users and you need enough users to have people take the time to post, I was like, I'm gonna need to get usainmilitary .com to distribute this so that I can jumpstart and get the users and that will lead to enough content where maybe we could jumpstart this thing and get going. And it just turned out that after talking with them, maybe the lowest moment I had as an entrepreneur would have been December.

of 2010, January of 2011. I was at my mom's house in New York City. This is like six months post -HBS. Had had a great meeting with USAA in October, November. Hadn't heard anything back, but they were really excited when we left the room. And I called the executive there and I said, hey, what do you think timeline looks like for Next Steps? And he said, well, fast for us is 18 months. But par for the course is like two to three years. Crazy.

I was sleeping, I was technically homeless at the time. I was sleeping on my rugby buddies couch. I had declined a quarter of a million dollars a year, give or take at McKinsey to pay myself $48 ,000. Had no idea what I was doing. Was literally talking to myself on the couch and being like, good job Blake. Graduated HBS, had an offer from the New York Yankees of management consultant. Said no, to start a tech company when you are not technical, awesome, and have no business experience.

Pablo Srugo (14:50) 

Did you think about taking it? Did you think about going back during that time?

Blake Hall (14:53) 

Yeah, absolutely. Absolutely. But I couldn't, like combat just changed me. One, I think rewired me in the sense that I was addicted to adrenaline. Also recognized that life is so short that I felt that I had to make my life count and make a positive impact on people's lives. And so wanted to kind of channel that altered physiology into a way that could really help people, which is in many ways the core reason I became a soldier in the first place.

So I called Kelly Purdue, who is my mentor and like my big brother now. And I was like, Kelly, I was like, I don't, I don't think this is going to work. And he said to me, never tell that to anyone ever again, especially not an investor. They're not going to want to write a check to you. And, and he said, look, chin up, we'll figure this out and get through it. And

Kelly is just is this always been in my corner. 

Pablo Srugo (15:51) It's crazy the power of blind faith, like especially in zero to one. It's you know, something that I frankly never got great at. Because if you are too close to like, quote unquote reality and calculate the odds too much, you know, it's just despair, right? But you just got to know it's gonna work somehow deep down.

Blake Hall (16:08) 

 Absolutely. It's the blind faith in people seeing it's like a great boss who sees something in you before you even see it yourself. And they just trust you and they give you responsibility.

That happened to me in the military with my commander who elevated me up quickly. But it also happened with one of my classmates at HBS. He heroed me a check for $80 ,000. I wasn't even really looking to fundraise, and I thought I was going to McKinsey. He's like, I think that idea is really good. He's like, you should go do it. And I was like, but Brian, I don't know anything about business, literally. And he's like, you'll be all right.

And then he introduced me to David Tisch, who was about to become the managing director of Techstars New York when he was just coming through Boston. I had coffee with him for 30 minutes. He wrote me a check for $20 ,000. But the most important check to me was from my older brother Russ. He's solidly middle class, not wealthy by any means. And he insisted on writing me a $20 ,000 check. And I was like, Russ, please do not do that to me because.

You know, it's really gonna stress me out. I have no idea what I'm doing. And he said, I'm like, why? Like, why would you write me a check? And he's like, well, you've never failed at anything that you really put your mind to. And I was like, that's the most screwed up thing you can say. Like reverse psychology or something. But but honestly, fear of letting down my friends and my older brother.

and their belief in me that was not warranted at all by anything at the time is what led to the formation of ID. Me without them, I could honestly say the company wouldn't exist. 

Pablo Srugo (17:44) 

It's crazy how much sometimes fear of failure, which can be casted as something negative, like fear of letting other people down easily can be something positive that just fuels you. And you're not the first person to say something like that to me. I have a good friend of mine who said, I just couldn't let those people down. I just couldn't do it. And that, you know, he had some kind of, he ultimately succeeded and sold his business for close to a hundred million, but he went through some real pain to get there. 

Blake Hall (18:10) There's so much psychology about, and I imagine a sports psychologist could probably talk about this more in depth about, you know, what's going on. But fear is a great motivator if it's used constructively. I mean, I was terrified, led over 450 combat patrols, any decision I made that was the wrong one.

I could have lost a fourth of my platoon, you know, literally eight guys to a bomb that was either buried or in a house or something. And that is on you at every moment. The ironic thing is that you need to compartmentalize and like let go of that fear of failure so that your unconscious mind can operate in a way that's free. Like whether it's sports or anything else, if you think about it too much, that's actually when you screw up.

So I was just reading like this thread where I think the SEAL teams talk about the power of letting go that when they drown them in the pool, that in their hands are tied. The natural tendency is like exert yourself and try to kick up. But what you actually have to do is you have to let go, drop to the bottom of the pool, then bounce up off, get a breath. And so there's this paradox again, that by trying too hard and struggling, you actually fail faster. Whereas if you just let go and you're calm and you bounce. And so

In combat, that was the scene from Band of Brothers where Lieutenant Spears talks about you just have to act like you're already dead, you're already caught around and that allows you to let go of your own fear of mortality. Really powerful. So if you just accept the worst has happened, I failed, I've completely screwed it up. Why would that have happened? And then you can go, okay, well now I can go back to now and I'm playing with house money.

It's just a liberating psychological trick to be able to use fear in a way that actually motivates you and allows you to perform at a very high level. 

Pablo Srugo (20:01) 

Fear can be caged or it can be fueled depending on how you frame it. I totally agree. And so you have those conversations, you have that fuel in you and Craiglist, this thing is kind of, let's say, not off to a great start. What's your next move at that point? 

Blake Hall (20:14) 

So two things happened. As we were kind of building prototypes,

We did one quick pivot where living social in 2011 was really hot in the daily deals model. And we said, well, if you can't build supply at scale, you could potentially do what living social is doing, which is you only need one deal a day and for it to be a good one. And if we create - What was living social? It's been a while. Groupon. So same thing, you'd have one powerful deal and they'd run one per day and they'd go out and that was all the rage. It was valued at $0 .00.

billions of dollars at the time here in DC. And so it was like, okay, well, what if you could have like one amazing offer a day that seems like solvable on the supply side and you could build a gated garden to only let in verified members of the military to help them access resources on the other side. A few months went by, looked at the cohort data and I saw that the churn numbers for engagement just didn't indicate a sustainable business model.

Pablo Srugo (21:13)

But you build it. So you actually built you built the website, you directed traffic to it, you got it off the ground.

Blake Hall (21:19)

 Okay, built an MVP and had a prototype pretty quickly. But the feedback we got from a lot of the merchants that we were talking to, they're like, you know, they're like, how many users do you have? And we had like 50 or 60 ,000. They're like, that's not enough for us. You know, if you're, you're talking to like the really huge organ, like the Sam's clubs of the world, you know, or national restaurant chains and things like that. They're like, that's just not enough. But They said your ability to verify identity in real time, what you built at the front door for your app, that's really interesting. And so, you know, Microsoft did a program where they were delivering free learning vouchers, but we're making veterans go in person to kind of pick them up. And I asked the marketing manager about that and she's like, well, you know, we know it sucks, but we don't have a way to verify who they are online. These things retail for hundreds.

dollars. I said, well, you know, what if you did have a way to verify online? She's like, then we might take advantage of that and use that. And the other brands had the same feedback. They're like, we would we would love if you could build this within our channels and our apps, we would love to segment out this particular community. So that was a learning where in my head, I said, my gosh, like PayPal for identity, where you could create an identity wallet, all these brands that are trying to reach the same segment of

consumers, you could spread the friction of verifying them across all of the different brands that used it. What was our 

Pablo Srugo (22:41) 

maybe stupid question, but like, what was hard about it? I mean, especially because today we're 2024, right? So you take a picture of your driver's license. I'm like, yeah, you're right. Right. What was that? What was the reality back then in, I guess, 2011 ish? And why why did Moses brands not have something like this? 

Blake Hall (22:54) 

Yeah, well, you know,

The military and like nurse communities, it's not even driver's licenses and things like that. The source of truth for military service is DOD, VA, the National Archives, USAA for the banks. The National Guard is actually administered at the state level and the reserves is like in this, you know, different set. So all the data is siloed and then the data is only digitized back to like roughly 1980. So all the Vietnam guys, they only have paper -based records. And so it's quite challenging on the back end to say, well,

If you're going to verify military service, do you actually have connectivity to the source of truth? That if you wanted to verify my educational degree from Vanderbilt, really the only educational institution that can do that is Vanderbilt. So how do you get connectivity back to the issuing source for any given credential? Because your audience are like early stage founders, I want to talk a little bit about what happened after the conversation with Kelly. So I find out USA and military .com aren't going to come through.

It's then February of 2011. I've been on my buddy's couch for almost seven months, like maybe a little bit longer or whatever since graduation. And I decided I've got to move the company down to DC, both to be able to be a big fish in a small pond, compete with government contractors to hire engineers. I felt good about that. I did not feel good about New York or Boston. And if all of sort of, you know, the military data and everything else is largely in the federal government, I needed to be close to those agencies to build relationships. When I moved, I moved down to DC,

during a blizzard. So I had my pickup truck with a U -Haul and my mattress behind it. 

Pablo Srugo (24:28) 

Solo founder, by the way, or did you have a co -founder at the time? 

Blake Hall (24:31) 

Co -founder, Tanel, was in Estonia at the time. He's over in Estonia. The other guys who worked in the academic project, one had gone to Goldman Sachs. The other one had gone to BCG. And the other one had an active duty commitment to the Navy. So it was just me by myself and then Tanel in Estonia. And at that time, I think I had

$7 ,000 in my personal bank account. I had $5 ,000 left in the business bank account. And when I got down to DC, I signed a lease for this like townhome because I figured out it would be cheaper to have like developers, you know, living upstairs. This is what ended up happening and like customer service on the desk. $50 ,000 lease is what I signed when I only had $12 ,000 in the bank and no source of income or revenue. So at that moment I ended up calling David Tisch and I was like, I'll literally sell

My brothers had bought me, I thought I was gonna die in Iraq when we got extended. And so they bought me like my dream like Corvette Z06 that was waiting for me when I came back. Very special to me because my brothers had trailer it across half the country and I said, I'm gonna sell this thing because I need cash. Three months of lease payments in the bank, like that's it. Yeah, exactly. Credit cards are starting to get maxed and all that stuff. And it was crazy. And so that was kind of a burn the ships moment.

Pablo Srugo (25:48) 

Did you do it? Did you sell? You sold, you sold that car,

Blake Hall (25:51) 

sold the car. Yeah. yeah. Maybe I'll get it back someday. I think it's Colorado. Yeah. but, but then w it was raising money and a few things happen. Needed to get to $500 ,000 for the first close. There is a great, a great executive named Tom Ferris at usaa. And he said, even though, you know, we're going to move slow here. He's like, I'd love to help you with the military service verification piece.

And in April, we got like a memorandum with them where we were able to open up an API where they would help us with automated verification based on all the folks that they'd verified and active duty veteran, retiree, family. It was amazing. Based on that and our ability to get access to the data that we needed to help these brands out with their problem, we were about $450 ,000. I was flying from San Antonio to Philadelphia for Army Nate, for

I can't remember what it was for actually because the timing for it maybe I think would have been right. But in any event, I randomly got upgraded to first class, which never happened. I didn't fly enough to get upgraded to first class. The guy sits next to me, his name is Larry Cochran, multiple times successful entrepreneur, was part of a group of San Antonio investors that had backed Rackspace all the way up and then had benefited from the IPO. And we just had this amazing conversation. Larry and I actually just grabbed

dinner like a week ago and after you didn't know him, you just like you guys just start talking. Met him on the plane. He wrote a $75 ,000 check. And that's how we actually got to our first close of $525 ,000. And without that, I wouldn't have been able to take the money down at all. Wouldn't have been able to make the lease payments would have completely failed and had a ton of debt.

Pablo Srugo (27:31) 

What do you think? Like, I mean, that's an amazing story on its own, but that whole half a million dollars.

How much of that was, I mean, in this case, I assume he just kind of liked you, like resonated or what percentage of that do you think is just people who started to just believe in you versus people who just saw the opportunity, understood the opportunity of, you know, their ID verification, how big of a business that could be. 

Blake Hall (27:54) 

I think it's more the Arthur Rock, like the belief in the person. And the reason we talked about this a little bit for the show, I think it's always science is that

A lot of the investors wrote me the initial checks. They're like, Blake, I really don't believe in the business model. And then they would show me pictures of their child. And they'll be like, by the way, this is my daughter's college fund. And they go, but I believe in you. Pressure, pressure, yeah. Believe in the business model. This is your daughter's college fund. But then you're still putting it on me. It was almost like my older brother just put it a different way. And I think the reason why they still believed in me is that

One of the things the military taught me to do is contingency planning and to make clear my assumptions. So when I laid out what I wanted to do with the capital, it was really framing it as like a series of scientific experiments. And here's the assumptions that I think are true. As we run these experiments, we're going to validate or invalidate these assumptions. If they're valid, we're going to do this. If they're invalid, we're going to do that. If it's something we haven't even thought of that happens, like we're going to

take that in in a very structured way, we're going to let the market dictate where we should move. And I think there's a lot of this now that I've read Steve Blank's Four Steps to the Epiphany, started eight companies, IPO'd five of them. There is a scientific method to building a company. And the only difference between a zero to one versus an established company is that in zero to one, you are running experiments to try to find product market fit, depending on what type of market you're in, re -segmenting or new.

And as long as you run enough experiments and you pick the right experiments, you eventually will find a secret that nobody else knows. And entrepreneurship to me is about legal insider trading. Peter Thiel talks about this in a different way that the number of startups that should be formed is equal to the number of secrets in the universe that matter about business and no one's yet discovered. So when you think about it as like, I'm just trying to discover. Once I discover, then I need to capture value scale, which is a different set of skills. I'm like, that makes sense. And so the. Reading those books, Four Steps to the Epiphany, Crossing the Chasm, Clayton Christensen's disruptive innovation really gives you a foundation scientifically to understand doctrine. And then it's just up to you to get enough reps in order to become proficient as an operator, very similar to the military. You learn a lot about tactics and doctrine, but you only really become proficient when you're walking combat patrols or in training when you're actually faced with situations. And after you have enough reps,

just like sports or anything else, you eventually are like, got it. Like, I understand like the triangle offense philosophically, maybe for basketball and the Lakers, but you actually run it in, you know, Kobe Bryant got pretty good at that thing after, you know, years and years of doing it. 

Pablo Srugo (30:42) 

Do you remember some of the specifics? Like, do you remember maybe some of the assumptions that you might've had at that time or some of the experiments that you would've wanted to run, especially some that like either totally fell flat or really, you know, worked?

Blake Hall (30:55)

Yeah, so I think, you know, if you look, if you take, if you take the daily deal thing, the thing that would have had to work is that the primary distribution method was email. So it's the size of the list, but it's not just the size of the engagement of the list. So you need to increase the size of your list, but you also engagement needs to be constant to the extent that size goes up and engagement goes down, which has ended up what, what happening living social raise over a billion dollars. They went to zero. They went and they went to zero because they didn't validate their unit economics. When I saw that the unit economics were not

valid. I talked to their founder. I was like, I don't know what you're seeing, but mathematically, there typically is like a rhythm to e -commerce. The checkout conversion rate is almost always around 3%. And, you know, with an AOV and margins, it's why that business model works for a ton of different companies and different verticals. That was not true. And so once I saw that the churn did not work, I went up to Andy Dunn's apartment. He was just, this is the power of the HBS network, Andy.

And I had also hit it off. He became an early investor, founder of Binobos, sold it to Walmart for 300 million plus. And that meeting was really transformational. So this is late 2011. We've done the first close. I've got a, you know, hired like a head of product and a head of engineering. And we've got like front end developers sleeping upstairs and customer services out of the table, you know, as we're running this daily deals side or whatever. And it is

room were like the founders of Warby Parker, the founders of Venmo, Andy Ratcliffe is a Hall of Fame BC from Benchmark Capital, the founder of Wealthfront. And after he gave this talk, I was talking to one of the founders of Warby Parker and he looked at me and he said, how much capital have you raised? And I was like, at that point, I think we were up, I was like two and a half million, because like McCombs Partners and everything else had come in after USAA. And he just looked at me and he goes, don't fuck it up. Thanks, dude.

And so that whole, this is like a Friday night, like I rode the train back to DC. I just remember - 

Pablo Srugo (32:57) 

This is by the way, like just timeline wise, it raises to an half million. This was when you'd already moved away from daily deals model or you were still doing that? 

Blake Hall (33:03) 

I was still like doing it. So we'd done the first close at like $500 ,000. And then after USAA kind of got behind it with the verification piece of it, we raised some additional capital and like McCombs came in and 

So this is now like late 2011 and I knew from the unit economics and the math that this would not work. The business model didn't scale. And I thought about that comment all the way back and I'm like, all right, you've already talked to enough of the brands. They're like, they don't want your app anyway. What they want is a digital wallet that they can embed into their flows. You've got one shot at this. Like the Warby Farker guy just said, like you've got millions of dollars.

don't mess it up. And so if you're gonna fail, fail while going for like the really big idea. And so the next Monday, when everyone came in, I said, listen, everything that we've been doing, it's wrong. We're not gonna do it anymore.

Pablo Srugo (33:58)  How many people were you at that point?

B(33:59) Probably like 15 or so. Okay, no give or take. And you can also hear this and like Mark and race and like strong opinions that are weekly held. I said, you know, this is what we've learned. It's not they don't want to gated garden, they want an identity wallet they can put into their flows. And so really the opportunity here is to be like PayPal 2 .0. And what we need to do is we need to build an identity wallet that can make social login and verify credentials portable. We're going to use protocols like OAuth and Sandwell 2 .0 and everything else, just like Facebook Connect and Google have popularized. And we're going to target the military community is going to be our wedge, where we're going to help all the brands that want to

you know, give back to the military community, we're going to give them a platform so they can just plug into our network and then immediately be able to distribute these things online. Today, our customers are Apple and BMW and Fanatics and Ford and GM and Cedar Fair and everything else and Under Armour. But at the time, I had no idea that it would be successful. So two things happened. As we started to talk to the brands about what we were going to do in the product, they said, like, amazing.

And they're like, by the way, it's not just military. It's students, it's first responders, it's corporate employee rates and discounts. For many of them now it's like their most profitable customer segment. So if you're a gas station segmenting out professional truck drivers and gig economy drivers, I was like, holy cow. Like it's almost like a portable CRM where the user can bring their own data and credentials with them. And then the government announced this program where they said, why are we making Americans create a different log in at each

government agency they go to and we pay a credit bureau, why don't we just verify them once and then let them have a social login similar to what Facebook Connect and Google offer where you can bring your verified credentials with you. When I saw that, I was like, my gosh, all the retailers that want to reach military, you have Veterans Affairs. All the retailers that want to reach students, you've got Department of Education and Federal Student Aid. All the retailers that want to reach senior citizens, you've got Social Security and Medicare that begins when you're 65 and over.

And there was this really interesting mesh of government agencies aligned to the specific audiences that we were serving. And that's when I was like, well, that's, that's how my wallet and my IDs worked in person that I, I could take my military ID to get a discount in retail. I could use it to get physical access to a military installation. A student can go to J crew and get 15 % off. They then go get physical access to their dorm. It's the same wallet. It's the same product, same ID.

But the risk is way different. The access privileges are way different. And once I saw that, I realized we had an opportunity to become the identity layer of the internet. For both, for both sides, for enterprise and for government. For everything. So this is when I got both excited and terrified. So the exciting part was Facebook, Connect, and Google have showed that people hate managing passwords and they value social login.

but you don't see those solutions in high -risk use cases. You don't see them in government, you don't see them in healthcare. Is it because consumers don't value social login for high risk? No, probably because they might not trust the brands offering that. There might be some privacy concerns around companies that track a lot of behavioral data within the app. Also getting into identity, hard to know, but the point is there was a void in the market. For identity verification, there was no combination of social login and verified ID where you could verify once and then have

your identity move with you, just like PayPal makes your payment credentials portable or Venmo makes your payment credentials portable. Why can't you make proof that Pablo's Pablo portable for government, for healthcare, for crypto, for fintech, for account recovery? And if you could do social login and verify identity plus payments, plus your professional credentials for certain discounts, plus your business credentials for proving that like I'm the CEO of IDME when I want to go into the government.

representing my business and not necessarily my personal identity. I was like, my gosh, like this is, this is really like visa 2 .0. 

Pablo Srugo (38:07)

 Does this all come to you more or less at once, like in a tight amount of time, or do these layers kind of come over time as you build the business? 

Blake Hall (38:16)

Almost all of it emergent. You know, this is now the culmination of two years really of, of trial and error and learning. And, and it was, it was, it was that train ride back when I kind of saw it, you know, it was All right, this model doesn't work. But the merchants and the government and the alignment, I was like, man, it's it's a visa. And the way visa started was actually out of Bank of America, both the issuing and the network piece were coupled. And so we're both a wallet that can issue credentials and we're a network. But the terrifying part was we needed to get started. Like we you know, how do you start a visa if you don't have users or merchants or, you know, any kind of credentials issued? And and so we we had to build this

product, which it took us from like late 2011 till November of 2012 to build. By the grace of God, I still know Amy Ely and Dave Dempski, an underarmor, all of them till, yeah, for the rest of my life, they were facing like a budget shortfall, I think in Q4. And I promised them like, if you integrated us into your flow, you know, we'll drive at least, you know, this many million impressions, top of funnel for you. And based on my financial modeling, which came from HBS and Vandy on the econ side. This is what I think you'll drive in incremental revenue. They integrated us in November of 2012, so the height of e -commerce. And we had a pilot with Telluride and with Veterans Affairs as well, but it was the Under Armour launch. And the night before we went live, I literally felt like throwing up. I mean, I was literally like over my toilet, like felt like I didn't vomit, but that's how I felt like I was about to, which is why I was in there. I felt physically sick. It turned out the launch. 

Pablo Srugo (39:56) 

What were you worried about? like that it wouldn't work or that it just nobody would care. Like what was your biggest concern? 

Blake Hall (40:00) Failure. If that launch had failed, it would have been over. 

Pablo Srugo (40:06)

 But failure from what? Like from your tech breaking or from just announcing it and just no one cared that you integrated it, no impressions, whatever. 

Blake Hall (40:12) 

Just tremendous personal responsibility. Like all those conversations with my brother, with investors who are like, this is my daughter's college fund.

I'm a Midwest middle class kid where like if I owed somebody 10 bucks, I took that super seriously and I would make it a point to pay them back and sort of raise millions of dollars and have everyone say, I'm just doing it because I trust you. The other side of that is like tremendous personal responsibility because it felt like it was my name and my reputation that was at stake, not necessarily the tech. But we signed up, I think it was something like 48 ,000 users the next 45 days.

getting paid on acquisition and, and that was product market fit. Walk me through. That's, that's amazing way to tie.

Pablo Srugo  (40:53) 

 Walk me through how that works. Like, so Under Armour embeds your solution into, let's say their e -commerce site. Is it a big PR launch that accompanies this or like where these, these 40 ,000 users, like where are they coming from? 

Blake Hall (41:06) 

Yeah. Think, think about it. Like the, a lot of how I think about technology is I just watch how consumers behave in their current workflows. And once you see how they behave, almost like when I went back to first principles and like, well, how do I use my physical wallet? Well, one, my wallet can go everywhere that I go and my IDs. And so in a retail context, when you get like a military discount or student discount, you're typically pulling out your wallet at the point of sale where there might be a sign on the counter that says, you know, thank you heroes. Like we're giving you 10 % offer. We have a 15 % offer students. And so in an e -commerce context, we're typically integrated right into the cart underneath the promo code section. So if you went to under armor, for example, you would see ID .me there like a DDS or whatever else. And when you click on it, the experience is literally just like a payment wallet where you authenticate to ID .me. If you've already verified your affiliation with a community, you go straight to a consent screen. You can consent to release, yup, it's okay for this brand to know that I'm a nurse or a teacher now, a number of other groups. And we send over an OAuth token.

that triggers a hidden promo code that nobody ever sees that applies whatever the offer is for that community. So the distribution, similar to like a payment wallet, is built into the checkout flow experience organically. So that makes sense. But why would that lead to kind of more impressions? I mean, that would just affect conversion, would it not? No, because you're now, it's all of like Under Armour site traffic and whoever is...

a service member or veteran that's within their customer base, which is about 8 % of their customers, give or take. Because it's user for you. Signs up for the wallet, verified. But the magic of it is, and the reason why Under Armour is so special to me is because I said, look, please don't make this like an API or a white label product, and here's why. The records digitization only goes back to 1980.

So the Vietnam guys who never felt the love of the country after they served and never felt what I felt as a post 9 -11 veteran, they would basically have to upload a document of their service record at every single website they visited. It'd be way worse than the password problem. And they're already kind of older and a little bit cranky. And I was like, that, a grandpa went to Vietnam twice. You know, I was, and my father -in -law went to Vietnam twice. I'm like, that community is really important to me because they never felt what I got to feel. And so in our model,

They only need to verify one time and then they can instantaneously release their pre -verified status everywhere else. Now the hundreds of brands that use IDB. And so the big part of our mission was around service and kind of leveling a playing field where sometimes the communities that deserve help the most in an identity that this is more about like low income communities that tend to not be represented as much in credit bureaus. If we can enroll them the first time and we use like a video chat process for that.

once their identity is tied to the login, it can now move across 16 federal agencies, 40 state agencies where they have single sign on and they can verify just as quickly as somebody who does have this presence in records. So leveling the playing field and our brand partners really bought into this vision of consumer centric identity, which is not just how we all use our wallets, but also because we can specifically help some of the weakest and most underserved communities, low income folks who need to access government.

older military veterans who deserve an even more frictionless experience. And that commitment to changing the world for the better for a lot of our service communities is something that now hundreds of brands have bought into where nobody should compete on friction, especially not for first responders and some of those other people that we get to serve. And do the brands take art under them or they're paying you? Is that kind of how the contract works?

That's right. So we call it workflow based return on investment because ultimately brands want to have a consistent experience across their channels. And if you can't deliver it online, you're typically delivering it through like the call center in person. And that ends up being far more costly and it's a worse customer brand experience. So like Visa, I think before Visa merchants paid roughly like six to 7 % of the transaction in terms of dealing with all the cash.

Pablo Srugo (45:24.078)

figuring out if they should extend credit and then they would have to settle checks, but there was like different levels of risk. And so Visa, even though everyone now is like, wow, two to 3 % is a lot, turns out without that third party utility that's really good at settlement and payment, it used to be six or seven. So dramatically increase the efficiency of commerce. And there's...

And our business model is the same thing. We're just streamlining workflows for brands by allowing users in many cases to self -serve the verification event and to then consent to release their data over to the brand in a way that's trusted. 

Pablo Srugo (45:56) 

Was that tough to validate at the beginning? Like the first few customers, when you're pitching them this sort of ROI, did they feel like, I wonder if that's really going to play out. I'll do this because I want to support this group? Or did they kind of buy into the math? 

Blake Hall (46:09) 

Yeah. I mean, even on the modeling side, this is where Again, you leverage your background, your skills. So, Magna Cum Laude from Vandy, Harvard Business School, McKinsey, I know how to model, I know how to make assumptions, but there's so much volatility in what the assumptions could be. And so, there were these things of like, what's the new to file user ratio going to be? Am I going to cannibalize this where somebody would already be checking out and they would happen to just apply the purchase and I'm just giving up margin? All these other questions. And I think

the early metrics that came back, 70 % of the users who used the program were new to file. The average order value was significantly higher than the typical. So I think if you had an average order value of 100 and a 10 % discount, it turned out that the AOV moved to 115 or 120. So with the discount, they actually bought more. They bought more. Yeah, and then the loyalty of the cohorts proved to be quite compelling because

the brand had formed an emotional relationship based on honoring service, which endear the brand that those customers then tended to shop more frequently. And so what a lot of our brand partners told us, and I had no idea that this would be true until we actually ran the experiment, they're like, we did this for corporate values, but this is one of the most profitable programs we've ever run. And that's when they're like, can you do students? Can you do first responders? And so...

There's this Ralph Waldo Emerson quote that says, is one of the most beautiful compensations of life that no man can sincerely try to help another without helping himself. I think that principle came to bear here, but we had no clue like mathematically other than kind of a finger in the wind and some assumptions of how it would play out. So 

Pablo Srugo  (47:54) 

and how did things work out from a revenue standpoint? Do you remember those early years? Like how quickly did you get, you know, after that first contract in 2013 ish? How quickly did you get to a million?

to two, three million. What was that kind of ramp like in those early days? 

Blake Hall (48:06)

 Yeah, so that ramp would have been to low single digit millions, I think in 2013 and 2014. And then there was a little bit of a stalling out period where we were working on penetrating the public sector. The North Star metric for me, since we're a network -focused business, was always about the user base though. So what I was tracking, and I actually told our investors, I care enough that they're paying enough money

for it to matter, but the early nodes are actually driving adoption and helping us drive greater utility. So I want them to pay less because they're providing value to us in a different way. So the user base is going one to 2 million, two to four, four to eight, eight to 16, 16 to 32. 

Pablo Srugo (48:48) 

On a kind of year by year basis from 2013 on, wow, okay. 

Blake Hall (48:53)

 During the pandemic, I think in like 2021, we signed up over 40 million Americans. 

Pablo Srugo (48:57) 

Wow, okay, okay. And even yet, even still, like even though you were focused on user,

It was kind of like zero to one, zero to two in kind of a year or so from the time that you figured out the thing till then. 

Blake Hall (49:08)

 Yeah. And now over 150 million in ARR, the business is growing at over 30 % year over year. Our gross margins will push through 80%. I mean, so it's crazy. 

Pablo Srugo (49:19)

 It's amazing. Well, you're getting that core back real soon, I assume.

So like, I mean, this has been amazing. Let me end with the one question we touched on product market fit. So the one other question I'm really curious with your thoughts on this is, you know, if you could go back now 14 years with that, with one piece of advice or for yourself, what might that be? 

Blake Hall (49:39) 

The very, the very first thing is to find a mentor who's smart in your space, who cares about you. That is, that is the single most important thing because without Kelly Purdue, and I told him this numerous times, I would not be an entrepreneur today. Finding somebody who's got your back and keeps your chin up.

who's inversely correlated. When I was doing really good as a kid, or I scored like a hat trick in soccer or whatever, my dad would look at me, and he'd look at me and he could tell I was like riding high and he'd go, just remember, one shit wipes out 99 hatta boys. But when I was really down, would pick me up. And so to have a mentor in your corner who carries you through the rough days and then also when you're starting to believe your own BS will.

deflate your ego and bring you back down to earth is really invaluable. And the second thing I would say from a doctrine perspective is read Jeff Moore, read Steve Blank's Four Steps to the Epiphany. Once I read those books, I understood there was a scientific method to starting and building a company. And now, if you gave me enough capital and time, there's no doubt I would build another unicorn just by using the scientific.

experiment to find another secret in the market that unlocks a whole different kind of journey. 

Pablo Srugo (50:56) Love it. And by the way, for those who don't know who is who is Kelly Perdue?

Blake Hall (50:58) 

 Kelly is a intelligence officer airborne ranger qualified. He actually won season two of The Apprentice. So he was like the face of LinkedIn for a period of time. And and David Tisch recommended him to me he'd gone in and successfully exited several

companies, VCs really liked him. He'd done turnaround events and now he's running an early stage venture fund called Moonshots Capital. But for me, he's like a big brother and he changed the arc of my life.

Pablo Srugo (51:31) Perfect. Well, Blake, thanks. Thank you very much for jumping on the show. It's been great. 

Blake Hall (51:36)

Of course, Pablo. Thank you.

Pablo Srugo (51:39) I just gave you content that you liked so much. You actually listened to the end. And guess what? You didn't pay a single dollar. Not only that, I didn't even put any ads.

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