A Product Market Fit Show | Startup Podcast for Founders

He made his first loan at 16. Now his fintech startup does $50M+ ARR—here’s how. | Tate Hackert, Co-Founder of ZayZoon

Mistral.vc Season 3 Episode 74

Description

Tate started doing commercial fishing at 16. He took that money and started lending it— on Craigslist! By 23 years old, he’d lent out $250,000. Then he found out about cash advances, and decided to start ZayZoon, a platform to help employers pay their employees faster.

Tate was one of the early pioneers of the entire Earned Wage Access space. By partnering with payroll companies and employers, ZayZoon lets employees access their earned wages faster.

It took Tate and his co-founders 4 years to get to their first million of ARR. And as soon as they felt they had it,  revenue crashed 60% in a quarter. The team got things back on track and since then has grown from 20 to 200 employees—  revenue is now closer to $100M than $10M. 

Here’s the story.

Why you should listen:

  • Why you need to be all-in at the early stages
  • How to arm channel patterns to sell your product
  • How to re-position your product so it’s clear you solve customer problems
  • Why it can take years for a new category to take off

Keywords

entrepreneurship, lending, FinTech, earned wage access, startup journey, mentorship, risk management, payroll integration, business challenges, market challenges, growth strategies, employer empowerment, product-market fit, exponential growth, timing, customer engagement

Timestamps:
(00:00:00) Intro
(00:01:25) Lending Money on Craigslist in Highschool
(00:13:06) The Origin of Zayzoon
(00:19:18) The Next Step After the Aha Moment
(00:24:44) Problems Starting Off
(00:29:08) Launching First Payroll
(00:30:58) Fundraising
(00:34:11) Making the Product Easy to use 
(00:45:32) Hitting a Million Dollars
(00:48:53) Why timing matters
(00:53:34) Finding Product Market Fit
(00:54:27) One Piece of Advice
(00:56:29) How all in were you?

Send me a message to let me know what you think!

Tate Hackert (00:00)

Ultimately, like you just got to pull on threads like you need to have some sort of confidence in your intuition and you need to be okay with that being a guiding light and so having this like crazy vision out there and then knowing that everything between that crazy vision and today Sort of just falls into place as long as you keep moving forward in that direction. 

I was still going back and forth to Vancouver Island and doing some commercial fishing because like the money was just too good to not do it. And Darcy was working on-

Pablo Srugo (00:32)

Dude, how much money do you make in commercial fishing? I gotta know now.

 

Tate Hackert (00:34)

Yeah, call it plus or minus like a thousand bucks a day.

Pablo Srugo (0:40) 

Oh wow okay! 

Tate Hackert (0:42)

Like just because you have a superior product, just because it's better than everyone else's, doesn't mean that people actually care. You need to tell them or show them why they should care. And then the other thing is sometimes economics don't make sense.

 

Like sometimes people have a beachhead of a business and what you're creating isn't a product, it's actually a feature. And I think you need to really, really be honest with yourself

Pablo Srugo (1:05)

Listen if you don’t want this show to move up the rankings, you don’t want it to get better guests. Don’t leave a review. Just don’t do it.  Why would you? 

But if you want to help out. If you want better and better guests. If you want to help this show move up the rankings. Take 5 seconds and hit 5 stars. Thank you

Tate, welcome to the show.

 

Tate Hackert (1:23)

Hey, thanks for having me, man.

 

Pablo Srugo (1:25)

Dude, so you were telling me that you were lending money on Craigslist when you were like 16 or something. Walk us through walk us through that story. How does that happen?

Tate Hackert (1:37)

Yeah, man. Yeah. So, you know, I grew up on the west coast of Canada on Vancouver Island and I grew up oddly enough in the commercial fishing industry. So I’d go out on the boat for a couple of weeks or a month at a time and come back with a decent amount of cash in my pocket as a 14, 15 year old. Beyond that, I was always involved and I just, I love to work. Right. So I was always trying to work and always save my money. And why that's important and I guess why that lends itself to this story is when I was 16, I had a decent amount of cash and I did a second mortgage for someone. So effectively someone had poor credit, they just got out of a divorce and couldn't get a mortgage for their home. And so I lent them some money for it. It was a family acquaintance, I suppose. And a year later, I got a cheque back with some interest and I thought, holy shit, this is a pretty cool way to make money. Like, you mean I can just give money out and get more money back? And now this is, so I'm 32 right now. This would have been back in, what is that, 2005-ish, 2006? Craigslist was a thing, man. Like, I was on Craigslist all the time, looking at cars. Both for just because I was 16 17 and  wanted to buy something but at the same time I'm thinking maybe I can flip cars. I was always trying to look for an arbitrage.

 

Pablo Srugo (2:58)

You must have been the coolest kid in high school. You had that spending money, you know, that's what everybody was after.

Tate Hackert (3:05)

I think I was a classic kind of floater in high school. I can mix and mingle with all the crowds, but I don't know if this would be the external perception of it, but oddly I probably felt a little bit like a loner but was able to mix and mingle with various crowds of friends. But yeah, Craigslist was just the place that I gravitated towards. It was this arbitrage play that you could have with instruments for me or cars or whatever it might be. And so when I thought about, how do I give more money out and get more money back? I'm like, well, Craigslist is where I go to look at things. So maybe other people will do the same thing. So I literally put an ad up that said money available. And I sifted through, as you can imagine, hundreds of emails. I didn't do a very good job of.

 

Pablo Srugo (3:59)

What were you looking to lend by quantity? Like you wanted to give out 10,000 at a time, a thousand at a time. Like what are we talking about?

 

Tate Hackert (4:04)

Yeah, you know, so, this is interesting and this ties into, I think finding product market fit in general. The thing is I didn't know. the only proxy I had was like a, mortgage, which is obviously massive. and so when I went on to Craigslist, I think in part, was like, okay, well, maybe more people want mortgages, but the other part of me was like, well, Hey, if I'm lending to someone on Craigslist, I probably want to decrease my risk threshold quite a bit. And again, I think in finding product market fit, like there's a bit of intuition. There's a bit of like throwing stuff at the wall. But then there's also a lot of the market telling you what they want. And so what I found on Craigslist was there's a ton of people that were looking for kind of a thousand dollars, two thousand dollars, maybe stretching up to like five thousand dollars.

It was enough where they couldn't get it from a regular financial institution. They'd already extended it in other areas. And so they were on Craigslist.

 

Pablo Srugo (5:02)

Were these people that would go to the payday, the money marts and stuff like that?

 

Tate Hackert (5:05)

Yeah, you know, that's what I ended up finding out, right? And so, I was dumbfounded at the time. I'm like, why? Like, of course I knew that there was going to be demand, but I didn't realize how much demand there would be. And what was really interesting is when I started looking at people's paychecks and like their pay stub information, was like, man, these people are making some pretty decent money, but for some reason they need to go to Craigslist for 2000 bucks for 60 days.

 

Pablo Srugo (5:31)

It's incredible when you look into it, yeah.

 

Tate Hackert (5:33)

And so it uncovered this entire world of -, I was just curious. I'm like, well, why is that? Well, okay. There's a huge cashflow issue. The only alternatives are really like payday loans over draft fees. and, so that was where the light bulb moment was where I'm like, okay, well, I need to figure out a way to provide this same utility, which is access to short-term capital at a small dollar cap. but do so in a way that is a lot more socially responsible for the consumer. Obviously payday loans overdraft fees are very egregious. And so the thought, that was originally what the conception idea for ZayZoon was.

 

Pablo Srugo (6:09)

And did you make some of these loans ad hoc, manually, like you met some of these people that emailed you, or how did that play out?

 

Tate Hackert (6:15)

Oh yeah. yeah. So, it was a lot of meeting in Starbucks, Tim Hortons and, like sussing people out and ultimately deciding whether I should hand them cash or not.

Pablo Srugo (6:29)

Was it a personal- like did you look at credit scores? Did you look at stuff like that or how did you play it?

 

Tate Hackert (6:32)

I didn't and you know what, half the time or more than half the time I didn't even take collateral. And so a lot of it was just pure trust. And I did over quarter million dollars of these loans from the age of call it 16, 17 to about 23.

 

Pablo Srugo (6:48)

Right. I assume you recycle like they're probably short term like a few months each one or

 

Tate Hackert (6:52)

Totally, yeah, yeah. They'd range from a few weeks to maybe six to eight months, right?

 

Pablo Srugo (7:01)

So you get that back, get some interest, lend it somebody else, et cetera, et cetera.

 

Tate Hackert (7:03)

Exactly, exactly. so, yeah, it was just like continually meeting up with people and giving them money, which was super odd looking back on it. But yeah, and I think like the I always get asked about like, what was your risk algorithm. you didn't take collateral, what stopped people from just taking money? I think there was like a couple things. One, I'd like to believe that a lot of people are inherently good or at least the people that you can read and you determine whether they're good or not, I guess I feel like I have a knack for that. And so there was that aspect to it, which is, well, generally people are just good regardless. You mix in the fact that I'm like 17, 18 year old, , do they really want to rip someone off like that? And then what you do is, I didn't realize this at the time really, but just after years of reflecting on the story and kind of how it came to be and people like you asking me questions of how the hell did you know what to do there? A lot of it was looking at like, okay, this person makes whatever 60, 70, $80,000 a year. They need a couple grand. They need it for three months. They also have kids in school and they've lived in this community for 20 years and like, are they going to skip town on two grand? The answer is no. And so really then it just becomes a collection exercise. And do I believe that they are going to pay back? Well, yeah, I do. But six months, like their optimism is the problem that got them in is the thing that got them in this problem in the first place. And so you just mentally work that into your cashflow yourself and you go, okay, well, they want this for six months. They're probably going to need it for nine months. I'll create a payment plan that extends over nine months, makes everyone happy. And, you know, we're good to go.

 

Pablo Srugo (8:48)

And what did you charge like somewhere between the credit card 20 % and like the banks like I don't know that time it was five, six, seven percent?

 

Tate Hackert (8:55)

Yeah, exactly. It varied. A lot of them were quite high interest and a lot of them were much lower, dependent on the amount, dependent on the risk, tolerance, all of that.

 

Pablo Srugo (9:06)

So you're doing this stuff through high school and then I guess into university?

 

Tate Hackert (9:09)

Yeah, exactly. I went to the University of Victoria. I studied economics there. I had no idea what I wanted to do. I always knew that the entrepreneurial path was there. And university was sort of this like, hey, I'll go. My dad had said, , man, go to university, , if nothing else, treat it as a networking event. And that's really what I did. So university for four years was mostly skipping class and instead using the university badge, which by the way, for anyone listening that's a university student, it's like the one time in your life where you can use that card and you can get a meeting with almost anyone, right? Like I'm a curious, hungry university student. I'm thinking about X, Y, and Z. Like, will you have a meeting with me?

And nine times out of 10, they will. And so I simply filled up my calendar with coffee chats and created a relationships with some really amazing mentors

Pablo Srugo (10:11)

About what? Were you exploring something specific?

Tate Hackert (10:14)

Yeah, you know, it was always in this like FinTech arena now dating back to 2009, 2010, like FinTech wasn't a thing. And so I was really just trying to connect with people that were doing adjacent things, i.e. taking money. Making more money with their money. Like that was really the top of the funnel sort of simplicity of it. And so that involved like, you know, meeting with people that own mortgage companies, meeting with people that owned payday loan shops, meeting with people that owned, you know, so on and so forth. And just getting curious and asking a ton of questions. And I think that like, the mentor mentee relationship is a really interesting one because so many people attack it as “I need a mentor” and they're going to give me all the info when really it's such a two way relationship. and so I think the thing that worked really well was I was incredibly curious. I bring stuff to the table as well, cool stories about lending money out on Craigslist and problems of like, Hey, I encountered this issue. Like what have you done before?

And that gives them some buy-in as well and wants them to invest their time in you. And so that was really kind of my entire university career to be honest there. That and watching Entourage on replay.

 

Pablo Srugo (11:36)

so we're, know, first of all, I was an econ also because I didn't, I thought I wanted to be a lawyer, but gave that up months in. So I really was in there not knowing what I want to do. 

Tate Hackert (11:44)

I feel like that is the classic, right? Because like that...

Pablo Srugo (11:47)

A hundred percent! econ and psych 101 dude. They have no idea what's going on. They're just having a good time.

Tate Hackert (11:52)

Well, so Econ's interesting because I entered university in 2009 and of course the financial collapse just had happened. so Econ up until that point was a really hot area because it was Econ and then you go straight into investment banking or whatever. But I was super curious because all of our classes then revolved around the financial crisis and it was like this really interesting moment where you were learning, yes, like theories and specific items in the economics courses, but it related to like what was occurring in the external world around me. And so really liked that. But to your point, I always told myself, I'll be a lawyer. I think that's just, you know, something you say as you're like going through those steps of higher education.

 

Pablo Srugo (1:36)

Yeah, that's one of the classic.  lawyer, doctor. Yeah, it's the obvious one. But then entourage, the other, that's the other thing you got me on, I'm, I've watched that show probably three or four times, dude. It's just awesome, man. Ari Gold is my hero. I guess my question is, man, like, how do you, cause you ended up obviously building, you went the tech route ultimately. I'm just thinking out loud, like if you're doing loans, like you would think the obvious thing would be, okay, how do I raise a fund to do bigger loans? Or how do I start like something on the payday side? 

 

That's where I would think your mind would go. How do you end up more like on the tech side?

 

Tate Hackert (13:06)

Yeah, it's a good question. You know, a lot of this stuff is just like looking back, it's just a series of choices or decisions that at the time didn't feel like anything. They're just throw away decisions, right? But over time they compound and eventually they turn into what is now ZayZoon. But I think like I definitely did go down that path. and then at the time it was like 2000 and, you know, call it 2011, 2012, like tech is starting to become cool, right? Snapchat had just launched Instagram. It just done their thing. Like, like it had started to be a thing. and so the idea of, well, how do I take what I'm doing and make it infinitely scalable was really interesting to me. and payday loans, like the other thing is, is I got obsessed with payday loans and payday loans are really expensive because of three reasons. one brick and mortar. so, just being storefront to old school administrative practices, have just like terrible ways of collecting data, terrible ways of processing that data. And then third, and it's the biggest one, like 15 cents of every dollar they, that they give out never actually comes back to them. And so that's why a payday loan is so expensive. 

 

Pablo Srugo (14:21)

Risk, I mean, that's another way to sum that up, risk.

 

Tate Hackert (14:23)

exactly risk. You have all of these great customers that are actually subsidizing all of the bad customers. And so the payday loan rate is so high. And so I got obsessed with like, how do I solve that problem? And tech just seemed like the way to do it. Well, brick and mortar, check. And then in university, it was a throwaway comment, but I was at the lake in Victoria with a friend and he was chatting with his dad on speakerphone in the truck and his dad was complaining about how he had just had to give one of his employees a cash advance. And right away I was like, fuck, I wanna hear this, what do mean you gave your employee a cash advance? And then my friend's kinda thinking, what? So I'm kinda talking to his dad through the speakerphone. And yeah, turns out his dad gives his employees cash advances all the time.

 

keeps charging them more and more for them because he just quite frankly doesn't want to go through the administrative hurdle of it and paid for his entire Christmas party off of fees from these advances. And as soon as I heard that, was like, that's the go-to-market channel. Like if we can, if it can create something that partners with businesses, businesses then can then, you know, and how that turned into ultimately was let's go a layer up. Let's partner with payroll companies. use the payroll company as a way to gather data and effectively underwrite someone really well or see exactly how many hours they've earned but haven't yet been paid for, give that money to that person, and then on payday automatically deduct those wages off of their paycheck plus any fees. And so that was ultimately the start of the idea for ZayZoon. And then over the years, we've pioneered this entire industry now called earned wage access, which is a really seamless, beautiful product that simply gives people access to the pay that they have earned but aren't actually going to be paid for two weeks.

 

Pablo Srugo (16:26)

Was no one doing it when you started? Because it's become a whole, I mean, it's an entire space with many, many, many players. I didn't know about it until maybe a year or two ago, but like, EWA is, earned away jacks is a huge thing now.

 

Tate Hackert (16:37)

It's massive. I will die on the hill that I invented earned wage access. In reality, I think there was a few of us back in the day that were kind of all triangulating around this idea of how do we use payroll data to extend funds to people and make it representative of the hours that they've actually earned but haven't yet been paid for. But yeah, I think...

or I do think Zayzoon was first to do this with an actual payroll company using that payroll integration as a way to extend those funds.

 

Pablo Srugo (17:!4)

What's the biggest draw of... It makes intuitive sense, but when you think about payday versus earned wage access, what's the biggest draw for EWA? What makes it so much better for lenders and even maybe for borrowers?

 

Tate Hackert (17:27)

So, the biggest thing is just simplicity, right? Like ultimately, simplicity and cost. So a consumer can, an employee can log into ZayZoon and specifically, you know, many times they enter through their payroll portal or through their time and attendance portal. So there's that like trigger action that's already being taken. They're clocking in and out of their work for the day. When they're clocking out of their work for the day, there's a a pop-up right there that says, hey, do you want to access your pay today through ZayZoon? Right. That employee can click through and from never knowing that we ever existed before to actually having money in their bank account, that entire process can be about 90 seconds. So it is very seamless because we, we, we have created that integration in the background with that employer and the payroll company. And then because of that, because we get repaid back through payroll, that risk that I was talking about that other alternative or that lenders experience, that risk effectively goes to zero. And we can pass on all of those savings then to the consumer.

 

Pablo Srugo (18:31)

because you're only lending hours that have already been worked but not paid out for the most part.

 

Tate Hackert (18:36)

Correct. Yeah. Like, and you know, we're not even lending, right? We're effectively accelerating, accelerating someone's cash flow. So, so we're never extending someone credit beyond what they've already earned, right? We're simply giving them access to the pay that they've, that they've earned. But because of archaic payroll systems and employer administration practices, they won't be paid for for two weeks. So actually that employee is effectively giving an interest free loan to their employer. In a funny roundabout kind of a way 

Pablo Srugo (19:08)

And so going back to that, like we jumped ahead a little bit, because you're in that truck that like aha moment happens. Where do you go from that point? Like what do you do next?

 

Tate Hackert (19:18)

Yeah, so there was this peer-to-peer lending kind of phenomenon that was occurring. I'm forgetting the name now, Lending Club. So Lending Club at the time was just launching. I think that was 2012-ish. It could be off by one or two years there. And Community Lend was a project out of Toronto that was founded by Michael Garrity and Casper Wong of Finance It. And so, so they've since pivoted now to finance it, which is a very successful Toronto based fintech company. But at the time I was like, my gosh, this is such a cool idea. I need to get in contact with this Casper guy. He's the only person in Canada that is, you know, creating fintech effectively. so, and man, I sent like messages on LinkedIn messages on Facebook. I called his assist. Like I tried to get there every way I could.

 

Pablo Srugo (20:09)

This is when 2012, 2012-ish?

 

Tate Hackert (20:10)

It was probably 2012, 2013. Yeah, maybe very beginning of 2013. we ended up having, so yeah, guess like long story short, we ended up connecting in this like mentor-mentee relationship. 

Pablo Srugo (20:23)

How'd you get him? How'd you get him ultimately? Yeah, how'd you get an answer ?

Tate Hackert (20:25)

Ultimately, it was, I think I got through on a LinkedIn message. And I'm sure years later, after he's checked all of his inboxes, he's like, my gosh, you got a...

 

Pablo Srugo (20:35)

This guy’s intense.

 

Tate Hackert (20:37)

You hit me up on Facebook, you hit me like everywhere. But yeah, it was pretty stellar. And so I ended up like riffing back and forth with him on these ideas and talked to him about what ultimately would become ZayZoon. 

So fast forward a year later, a year and a half later, I had finished university and a girl that I was dating at the time was from Calgary and we'd both finished university at the same time. And so I was going to move to Calgary and be with her. And so when I got to Calgary, was like, all right, I'm ready to do this. I want to make this whatever idea that could potentially be ZayZoon and I want to make this a reality.

 

And so I had met, I reached out to Casper and said, man, give me someone in Calgary that knows this tech thing. And Casper goes, well,

 

Pablo Srugo (21:30)

Yeah, because, you're like me, like you're an Econ guy. You don't know how to build an app at all.

 

Tate Hackert (21:33)

Man, I had no idea. again, like remember like 2013, like, it was still, at least from like a drag and drop perspective and being able to do this easily, like it wasn't very well known. And so I'd coded up, I took like this, I think it was Code Academy course and I coded up like the first version of ZayZoon, which really was just like a landing page with a form through Bootstrap.

And that was ultimately actually what collected some interest on it at first, like a wait list, if you will, started siphoning through some of the Craigslist activity that I was doing through this web page. So yeah, Casper's like, well, I know one guy. I know one guy in Calgary. He operates a tech company there in the oil and gas space, you know, like really good guy. Like you guys, you guys should chat. And so I forwarded on my presentation and my deck and was like, Hey, what do you, what do you think of this? Right. We ended up having a conversation and just honestly hit it off since, since day one that that's Darcy tour. Who's my co-founder and actually ZayZoon CEO.

Pablo Srugo (22:51)

And what did you pitch him then? Like, what was your vision? Was it already, you know, earned wage access through payroll companies? Like all that was flushed out?

 

Tate Hackert (22:57)

It was, it was effectively. Yeah. So it was, I, I'd created a relationship with a payroll company already. I had basically had them at a point where they said, yeah, if, if you build this, like we're in. And so at the time it was, it was lend money at a much, at a higher rate, right? Like now, now we charge anywhere from $0 to $5 at the time a payday loan was $25. And so the thought was, well, if we can be like, 12 bucks, that's like half the cost, that's pretty awesome. And we can do it through this payroll company and all is great. And so that was like kind of the initial idea, right? And then over time, it sort of shifted into, well, actually like this payroll data, we should be getting like their actual hours worked and you know what, like that's gonna allow us to do it for even cheaper and then we don't need to actually extend credit. We can do it simply just as like a flow through of funds. And that was sort of like the continual progression of the idea. yeah, so Darcy and I hit it off and we were kind of, I'll say off to the races. In reality, it was walking around drunk in the dark for like three years trying to figure out what we were doing. Yeah.

 

Pablo Srugo (24:13)

What was hard? And I'll ask it two ways. One is, maybe I'll ask it this way first, for the payroll company and especially the new earned wage access, which is just, you've worked this many hours, here's your money up front. Why do they need you or anybody like you? Wouldn't they be better off just trying to take more? Because I'm sure they get a cut of it. Getting more of that cut, whether it's out of their balance sheet or whether they partner with somebody who's just totally in the background and it's just capital.

Like what role does ZayZoon play in that equation?

Tate Hackert (24:45)

Yeah, and what you're saying is probably going to be the reality in five to seven years. In the meantime, though, and up until this point, earned wage access is a product in and of itself. There's a ton of intricacy to it. We know of very large payroll companies, multiple very large payroll companies that have tried to do this themselves have, you know, failed miserably with it. And so you're right. It seems so so simple on the surface But it's really difficult It's really difficult

 

Pablo Srugo (25:17)

What was hard? like maybe, yeah, as you walk through in those three years where you're trying to figure it out, like what were the parts where you kind of were banging your head against the wall?

 

Tate Hackert (25:24)

Yeah, so I mean, I think like some stuff was less technical and more just like people issues, right? And I think that's important to note. So for example, we hadn't funded the company with anything beyond 10, 20, $30,000 of our own capital. And so we were sort of just like stringing this together as we went along. I was still going back and forth to Vancouver Island and doing some commercial fishing because like the money was just too good to not do it. And Darcy was working on-

 

Pablo Srugo (25:57)

Dude, how much money do you make in commercial fishing? I gotta know now.

 

Tate Hackert (25:59)

Yeah, call it plus or minus like a thousand bucks a day.

Pablo Srugo (26:05)

Oh wow, okay, dude. All right, that's my fallback now. *laughs*

Tate Hackert (26:10)

 Yeah. So, the magic of it though was you'd go out on the boat for 30 days at a time. Right. so then you're coming back with a huge, a huge check. And when you're, 22, 23 years old, it's pretty impactful

Pablo Srugo (26:22)

that's crazy money man, yeah that's crazy money for that niche.

 

Tate Hackert (26:25)

Yeah,I think Darcy was also doing like his own projects as well. And so we were both sort of like part-time on this thing, but trying to make it work and really looking for like a signal beyond our intuition that there was something here. We eventually brought on a third co-founder, Jamie, who's our CFO and a major investor in ZayZoon. And that was where things started to take hold more, which was kind of in 2018. yeah, know, leading up to that point, was...

We were so stuck on this go-to-market through payroll. We didn't want to go and partner with employers individually. We wanted to go through payroll systems. so step one was just a sales channel. There was only so many payroll companies in Canada. spoiler alert, we ended up pivoting to the US in 2018, and it was a much better experience for this go-to-market motion anyways. And so we were definitely very stuck in this, in this go-to-market motion and didn't want to stray from that. So that was sort of like problem number one that we had to figure out. Problem number two is once we had that payroll company, like how are we actually, like we had thought, well, we'll build it and then they will come. Like all of the employees will just ultimately find us. Well, in reality, like how many employees actually use a self-service portal to look at their pay stub? It's about 10, 15%.

 

So now you're like capturing 10 or 15 % of 10 or 15%. It's a super small market in comparison to what's actually available out there.

 

Pablo Srugo (27:58)

of 10, because of who needs it, right? Like, yeah, okay, got it.

 

Tate Hackert (28:01)

Correct, correct, correct. In reality, it's a lot more people that need it than that. But at the time, we were really comparing it to what does the market for payday loans look like? And that's kind of in that range. And so I think that's been the biggest thing for us back then and also now, which is the top of the funnel we can fill really, really nicely. We partner with all these payroll companies. All these businesses are like, my gosh, this is so amazing. I'll turn this on for my employees. And then we go, okay, well, how do we capture the employees now? And for the longest time, we were giving each other high fives and really like getting caught up in these vanity metrics of we have X amount of payroll partnerships and X amount of employers, but the conversion was stuck.  

 

Pablo Srugo (28:45)

How bad was it? Like, do you remember?, was it, is it 1 %? Is that what you were getting ultimately of, say an employee base or something like that? Okay.

 

Tate Hackert (28:53)

Yeah, yeah, I mean, it was it might have been less than that, right? Like, it was terrible. And it took us until probably 2021, 2020, 2021 to like, really have that unlock and get that exponential growth.

 

Pablo Srugo (29:08)

What were you thinking at the time? Because that's a lot of years, 2013 you start-ish, right? When did you launch ZayZoon? Really, when did you launch the first payroll?

 

Tate Hackert (29:14)

Yeah, we launched in market in 2016, beginning of 2016. 

 

Pablo Srugo (29:21)

Okay, so 2016 to 2021 is you have these like conversion issues and in meantime you also have like the Canada then to the US in 2018. Like are you thinking to yourself maybe people don't really want it like nearly as much as I thought or did that never really cross your mind?

 

Tate Hackert (29:37)

You know, it's a really interesting question and ultimately like product market fit, that's what it's about, right? Like that's what separates the good founders from the bad in that regard is, is knowing like when to keep going and have that tenacity versus when to cut your losses and not, right. you know, I think we saw really, really magic moments appear with the employees that did find us and did use us. And we saw a funnel being filled with payroll companies that wanted this for their clients. And we saw clients that wanted this for their employees. And so we saw all of these parts of the funnel firing, but they just weren't orchestrating well together. That's really what it came down to. And so I think that's what gave us this confidence that there's something here. We just need to find the unlock. And now as well with this, you know, it's interesting because we sort of patchworked this business together as we went along. So we'd have like, raise money, be good for six months, raise a little bit more money, be good for six more months, you know, so on and so forth.

Pablo Srugo (30:47)

We have tens of thousands of people who have followed the show. Are you one of those people? You want to be part of the group. You want to be part of one of those tens of thousands of people so hit the follow button.

How much did you raise in those first like, you four or five years?

 

Tate Hackert (31:01)

in that 10 million range. 

 

Pablo Srugo (31:08)

Okay, okay, so you got some pretty meaningful rounds along the way.

 

Tate Hackert (31:12)

Yeah, you know, Calgary really stepped up for us. Our first $18 million of capital was 99 % Calgary-based, high-net-worth angel investors and family office. So we didn't actually take VC capital until our Series A, or Series B. Sorry, we didn't take venture capital until our Series B.

Pablo Srugo (31:36)

Hmm. How big was the B?

 

Tate Hackert (31:37)

We did a B and then we did a B plus or B extension, guess you'd call it. Basically pre-empted on a, you know when you announce a series B and everyone's like, we want to invest in you. Yeah, yeah. So we did an extension, but at a much higher valuation, thankfully. But in total that was about 36 million...

 

Pablo Srugo (32:01)

Okay, nice.

 

Tate Hackert (32:03)

and all US dollars, by the way, being quoted. And so, yeah, like, I think, you know, in hindsight, if we didn't have that Calgary community sort of supporting us, and if we didn't have this like blind optimism that it was going to work out, and we kept patching it together six months at a time, yeah, like it would have failed many times over, right? But it was just enough, and we just,

 

showed enough proof to get that next check. And like that was just enough to keep us going. And so ultimately that's, I think like what finally took us to that point of unlock years later, where that hockey stick growth finally came.

 

Pablo Srugo (32:47)

What was the unlock?

 

Tate Hackert (32:48)

Yeah, it's funny I say unlock and really it's like it's like a-

Pablo Srugo (32:51) 

It’s not one thing 

Tate Hackert (32:53)

Yeah, it's like a series of tactics and strategy strategies I guess but you know I think the biggest thing is from day one we had this thesis that we would embed in payroll companies and use that payroll company as a channel down to everyone else right and.

So since day one, we had this thesis that we were part of the payroll companies and use them to be a channel to everything else, correct? And so I think like the unlock for us was realizing that it wasn't just doing a single thing and it wasn't just embedding the payroll company, being a product led organization only or being a sales led organization only or being a marketing led organization only. It was how do we...

how do we bring all of these tactics together really, really well? And stacking those tactics ultimately would give us conversion well above and beyond what we are experiencing. And so I think the unlock that people look for is what's the one thing that's gonna give me this crazy amount of conversion or this crazy amount of inbound interest? When in reality, for us, was like we just needed to be really, we needed to get comfortable with the fact that our unlock was actually a stacking of tactics that gave us 1 % conversion here, 2 % conversion here.

 

Pablo Srugo (34:07)

What were some, like when you think back to that, like what were some of the most like meaningful ones that you did?

 

Tate Hackert (34:11)

Yeah, I think for one, was, our product is so easy for employers. It's literally a set it and forget it. They, they, they activate ZayZoon. They let their employees know, and then it's completely hands off because of the relationship that we have with the payroll company and then the subsequent employee. and for the longest time, we thought that that was a really great thing because, it's hands off for the employer. They don't need to do anything. How great is that in reality though? Like that employer is such a great channel to that employee. And the more attention that you can grab from them, the more that they're willing to then talk about ZayZoon, bring ZayZoon up, include us in their onboarding, not forget about us in their benefits package. and so for us, it was like site visits, go and visit employers like crazy. we, have a full team now that is like on the road 24 seven visiting employers.

It is taking that same site visit and packaging that up in a digital format so that when an employer is onboarded to ZayZoon, they get a full download of materials. It's easy for them to pick and choose and select and have things automatically printed and sent to them. And so we're making it still seamless for them, but we're showing them added value through some of these workplace materials that they can extend to their employees, get their employees using the product and then we can give them that feedback back saying like, hey, you have X amount of employees using us right now. Here's what they're using ZayZoon for. Like this is really impactful. 

 

Pablo Srugo (35:44)

What's in it for them, by the way? Like the payroll ones, I assume, make some cut of the revenue. I don't know if that's true, but then what's in it for the employer?

 

Tate Hackert (35:50)

The employer, it's a retention, recruitment, and productivity play. So employers are fighting for talent, especially think of like quick serve, franchise units. They're in a war for talent. Employees are leaving for job across the street for 20 cents an hour or more. And so any benefits that they can do, any voluntary free benefits that they can offer is a bonus to them. One of the unlocks that was discovered, is recruitment. ZayZoon as a recruitment tool is massive. And so now what we do is we package up in really easy templated formats for employers ZayZoon information for their job postings. We have posters that employers are putting into their workplace that show like, hey, work here today, get paid today. One of our many employee benefits. And it's acting then as like a recruitment channel for them. We're setting them up with

Yeah, stuff in the background. I don't want to get too much into it, guess, just from like a...

 

Pablo Srugo (36:53)

But I think at a high level, like what I'm getting is, at a high level, you're just arming your channel. Like if your channel is going to be the employer selling to that employee, just the fact that you exist and you're there, which was the set it and forget it idea, isn't gonna be nearly enough because then your channel isn't doing any of that sales and marketing effort for you, which is really like what you need them to be doing. So by arming them with whatever you need to arm them with, I think in your case is a lot of information and maybe best practices and them understand being top of mind and understanding what you could do for them to solve some of the more important problems around talent and retention, then they're armed and  they can use that and do like the heavy lifting, you know, for you or in conjunction with you and actually truly be a partner and a collaborator.

 

Tate Hackert (37:38)

I think one of the biggest mistakes that companies make, and we still make it today in many regards, because it's just simple mistake to make, but you talk about you versus them. You talk about, this is a classic, I think, Apple, 10,000 songs or a thousand songs in your pocket versus a gigabyte of space. The thousand songs in the pocket is really the... impact statement is powerful and it's what the consumer can connect to. But it's such an easy thing to forget. And so with ZayZoon, earned wage access, it was really easy for us to talk about, employees can get their pay really quickly. You know, this is hands off for you. This is like seamless, et cetera, et cetera, et cetera. But, we weren't actually talking about the problem statement that the employer was experiencing, right? And so when you switch that narrative to be, hey, you have retention issues. Here's how ZayZoon can help. Hey, your employees are stealing from the cash register because they are financially stressed and they need $20 to get by for the next day. Here's how ZayZoon can help. And when you connect it with a specific trigger action, in, in, that employer's mind, like that, I believe is where that unlock is. and that's what all of a sudden takes the interest and intent in, what you're doing to the next level.

 

Pablo Srugo (39:04)

Walk me through maybe just in terms of numbers, the timeline and the numbers, right? I would love to understand kind of that ramp. You started in 2016. When did you make the first fully digital loan? And then how did things kind of grow from there?

 

Tate Hackert (39:20)

Yeah, so advance, not loan.

 

Pablo Srugo (39:26)

Advance. So even at the beginning, it was never a loan. It was always in advance by the time you actually went out and did it. Okay.

 

Tate Hackert (39:32)

Correct. Correct. Yeah, exactly, it's such an interesting thing, looking back and trying to, timelines just mesh, right? But, know, 2016, beginning of 2016 or towards the end of 2016, we would have launched kind of like a beta and I don't know, man, we were probably doing like one advance a day. if that. maybe one every couple days and it was like cheering every time it happened.

 

Pablo Srugo (40:00)

And you're making like your $10 or so per advance, that was your fee.

 

Tate Hackert (40:03)

Yeah, I think when we finally launched in market, it was around $7.50. Yeah.

 

Pablo Srugo (40:10)

Okay, and some of that goes back to the payroll company, I assume?

Tate Hackert (40:13) 

Correct. Yup. 

Pablo Srugo (40:15)

 Right, and some of that, and you're lending off your balance sheet, so there's no kind of interest cost for you?

 

Tate Hackert (40:20)

Yeah, so there is interest cost because ultimately we're raising a capital pool. And so in the early days, that capital pool was being raised by angels

Pablo Srugo (40:31)

It was equity dollars. 

Tate Hackert (40:34)

yeah, exactly. And I mean, now that capital pool is being provided by large FIs. yeah, I remember being in Mexico in December of 2016 and I was like the only person doing customer support and I remember just like I could not relax in Mexico the entire trip because I had like three people a day that needed to be helped and so I'm sitting there doing support for three people a day and like my girlfriend at the time my parents and everything were off they're going to the beach I said yeah I'll be there in like half an hour I just got to finish up this conversation and then as soon as I finish up the conversation someone else came in and they're like, hey, how does this work? And then like next thing I know, I was literally on my phone doing customer support for like eight hours because I was just so stoked that there's people wanting to use the service. And this went on for, man, that went on for almost a year. Brought in my sister to help with customer support, hired another couple of people, but that was like,

When thinking back on it, that was like one of the most exciting times. was like you had these people that were discovering this magic for the first time ever. saying things like this is real conversation. Someone goes, hey, I'm standing in line at the grocery store. If I take a payout right now, like am I going to get it before I get to the front of the line? Like I need to pay for my groceries or else I'm going to take some stuff back. so like right, by the way, this is total swivel chair.

And I should have said this at the beginning. So in the beginning, when someone took an advance, I would log into my online banking, send them money from the account, and then send them back a message and say, hey, your money's on its way. Like, thanks for being a great -dude 

 

Pablo Srugo (42:30)

You're just e-transferring money to these people. That's crazy.

Tate Hackert (42:33)

exactly. It was smoke and mirrors and so with this individual in the grocery store, yeah, like I was like, okay, I got to this really quick. So I wanted to e-transfer or RBC e-transfer and like sent it and then.

 

Pablo Srugo (42:44)

So the payroll, like at that point, the payroll integration was just for you to get visibility into them, not like for any of the money movement stuff, right?

 

Tate Hackert (42:51)

100%. Yeah, yeah, yeah. It was to capture basically like pay stub data, some employee information and that was about it. And that's still where it's at today, right? So we still have like our own payment rails that we send funds through and everything. But the data that we collect now from the payroll company is a lot more like fulsome, I suppose.

Yeah, man, it was pretty cool. Really cool actually looking back on it. like all those. I remember there was one guy where we sent him because we get get like EFT options. So like sending money through bank, which of course takes a couple of days. And then we had e-transfer options and someone and different pricing for both of those. These e-transfer cost, you know, a couple of bucks to transfer back in the day.

And we had someone that accidentally took a payout to his bank account. And he's like, I need this money now. Like I didn't realize that, that like EFT took two days. And I remember downtown Calgary, ran across the street to the bank and I took a bank draft. And then I ran across the street to the other bank and I dropped the bank draft off at his bank so that he'd have money instantly. And so like, of course with that, I think it costs us like 40 bucks for a bank draft. But it was all about keeping that customer happy and just like, can we be so intense with, yeah, how can we just be so intense with that experience?

 

Pablo Srugo (44:20)

maybe a stupid question, like you always want to keep customers happy, but in your case, are you expecting referrals? Are you expecting continuous usage? Like what do you expect to get out of a customer who loves the product?

 

Tate Hackert (44:31)

Man, back then, I don't know if we expected anything. It was more just like we'd launched something. We were so stoked to interact with people that were using it. We were so like just stoked to learn about their experience. And I think like the more interaction that we had, the more customers that reached out to us, like we didn't view that as a problem. We viewed that as an opportunity. Like we'd see that and we'd go, my gosh, like, okay, these are all the ways that we can improve our product.

and I think that's like looking for those signals along the way is super, super important in that pursuit for product market fit. Like, it's, so easy to, to, you know, what, automate everything from day one or, know, whatever, whatever. But, but like that grindy manual processes are so important in the early days because that's ultimately what sets the foundation for the years thereafter. Right. so yeah, I don't think we were looking for anything in particular. think we were just excited that people were using our product and we wanted to chat with them.

 

Pablo Srugo (45:32)

So maybe just back to numbers, I'm trying to paint a picture here. You start off, it's like an advance, an advance a day, $7 a day, let's say something like that. Walking through this, for example, when do you hit a million dollars in advance fee?

 

Tate Hackert (45:46)

Oh man, I should have thought through that a little bit more before chatting with you. man, it had to have been a couple few years. I'm assuming revenues were something like a hundred grand, a couple hundred grand, maybe half a million, something like that. And then...

Yeah, like, look at looking at 2019. So 2019 actually is when we knew it started to work, which seems crazy, right? Like that's, that's three years after launching. We were like, yeah, there's something here. And actually in February of 2020, right before COVID, my co-founder says, he, he's so Darcy and myself are kind of like the blind optimists nd we were just, you know, talking fast and throwing stuff out there. And then Jamie has this beautiful skill of being able to, well, two things, A, take what we say and like distill it down into like a single sentence beautifully. But then the second thing is like, he kind of brings that realism to the table as well, right? And he goes, well, like actually guys, you know, X, Z. And so in February, Jamie goes, guys, I've never felt more confident about this business before. Like we got something now. We got it. And of course, like less than a month later, COVID hits our, our revenues plummet 70 % overnight because everyone's shelter in place. Like no one's working. If people aren't working, we have no one to advance pay early to. And so 2020 was a crazy year where we basically had like a 60, 70 % drop in rev. and then clawed her way back and actually finished the year 60 or 70 % up, which...

 

Pablo Srugo (47:38)

Hmm with what? do you remember like we're talking a couple million dollars or so?

 

Tate Hackert (47:41)

Yeah, know, 2020 would have been, yeah, a few million, a few million. And then from 2020 to now, it's been crazy, right? So to put it into perspective, in 2020, we would have been maybe, call it 20 people. We're 200 now. And...

 

Pablo Srugo (48:00)

Wow, okay. And I assume revenue's grown commensurately to about 10x or so.

 

Tate Hackert (48:06)

Yeah, it's grown exponentially to that. Yeah, so I think like one of the things that we've done well at Zeyzun is, you know, maintaining this thesis of if we partner with payroll companies, that we can use them as a really efficient channel to everyone else. And what we experienced in the last couple of years was just really spectacular, like really crazy, spectacular growth because finally, ylike ou said at the beginning, you said, you know, I heard of earned wage access one or two years ago. Well, that's sort of like the rest of the world as well. And so payroll companies went from. Yeah, we'll partner with you and maybe we'll, you know, maybe we'll put you in this section of our, of our app and whatever, whatever. To now they're like, we need to partner with you and we want you front and center and we want this feature available to all of, you know, everyone. mass activated, let's go. And so we experienced exponential growth without having to add exponential people, even though 20 to 200 seems like a ton in comparison to the growth rate. It's not because, because really it's like product and marketing led focus and sales led growth has tapered more and more as the years go on.

 

Pablo Srugo (49:21)

So you're closer to the 100 million than the 10 million. Can we say that?

 

Tate Hackert (49:24)

We can say that, yes, we can say that. I don't wanna get too specific on numbers, but yeah.

 

Pablo Srugo (58:53.585)

But I'll ask you something maybe that's actually maybe more interesting is, because from a timing perspective, timing is so important. What drove that? What made earned wage access so important to all the payroll companies, more or less at the same time, a couple of years ago?

 

Tate Hackert (49:45)

Yeah, yeah, it's a good question. And one that I've tried to think through and should have a better answer for. I think in part, a lot of the payroll industry in the US is old legacy technology that is owner operated. They've been in business for 20, 30 years, and they've built a beautiful lifestyle business over the decades. And so that's important to point to, right? Like in the US, 50 % of payroll is paid by the big guys, ADP, Paychex, Paycom, these big players, right? 50 % though is effectively mum and pop independently owned payroll companies. In Canada, it's much different and we don't need to get into that, but you know, it's like ADP and Ceridian are the 80 % and then 20 % is everything else. But what that means is for all those mum and pop, , they're getting to this point in their life cycle or in their business and personal lives where they're like, I want to retire. And so you've had a huge influx of private equity come into the payroll space and start to consolidate all of these payroll providers. Consolidation occurs, private equity occurs, and tech goes up. So basically they've been modernizing their systems. They're more like you said, we do give a revenue share to the payroll company. And so they're more focused on their bottom line. They're more focused on finding ways to monetize their client base and the employee base. And so I think that's one. Two is there were a couple of key players like Gusto that launched and really made payroll a more holistic solution that focused on the employee. Payroll to date was really just a relationship between the payroll company and the employer.

 

and the employee was simply someone that got paid. Gusto flipped that on its head a little bit. Yes, it focuses a ton on the small business, but the employee is a major focus point as well. They worked to do...

 

Pablo Srugo (51:46)

But Gusto's been around for like 10 years now.

 

Tate Hackert (51:48)

Yeah, they have for sure. But I mean, I don't think that they've probably been anything of substantive size, at least as it relates to the payroll space until four or five years ago. And so I think they worked on delighting that customer experience, the employee experience. And so a lot of these legacy payroll providers are like, ZayZoon can be that delight for us. They can be that added value benefit that interacts with the employees specifically. And so that's really, I think, part of that kind of development of the market as well. And then lastly, COVID was a really good driver of workplace transparency. And it kind of put everyone on a level playing field. Like June of 2020, mean, whether you're the boss or you're someone way down here. Like you're both sitting there in pajamas talking on a zoom call., everyone experienced some financial hardship and then the concept of money became more of a conversation topic. And I think specifically in the workplace, up until COVID, I don't think money in the workplace was, was as talked about. And so if I'm an employer looking to give my employees some sort of financial relief, I mean, why wouldn't I use earned wage access? It's this really simple turnkey solution. I think there's a, to answer your question, I think there's a bunch of things, but those are a few that I kind of triangulate on as to why the market's really taken off.

 

Pablo Srugo (53:25)

Perfect, well let's stop there and I'll ask just the two questions that we always end on. The first one you touched on a little bit, but I'll ask it anyway. When did you feel like you had true product market fit?

 

Tate Hackert (53:34)

We had true product market fit. being the optimist that I am, I will say we had true product market fit when I'm sitting there in Mexico at the end of 2016 doing all of these customer support messages. Right. And as soon as I finished one thinking that I could go to the beach and another one comes in, like to me, I went, holy shit, there's something here. In reality, I think when we look at all the personas of our business, the payroll company, the employer, the employee, we probably didn't experience product market fit truly until the end of 2019.

 

Pablo Srugo (54:16)

And then the last question, because you work with a lot of founders now, what do you find is like the piece of advice that you're giving most frequently?

 

Tate Hackert (54:27)

You know, it's been really difficult for me to articulate this because it comes very naturally, but people get so caught up in product market fit and how do I find that? And, like, how much of a plan do I need beforehand? And how do I turn that plan into reality? And man, , again, I've had a hard time, articulating this, but ultimately, like you just got to pull on threads like you need to have some sort of confidence in your intuition and you need to be okay with that being a guiding light and so having this like crazy vision out there and then knowing that everything between that crazy vision and today Sort of just falls into place as long as you keep moving forward in that direction. But it's when you start to like not have that forward momentum and when you stall and when you're not pulling on multiple threads and tossing one to the side and doubling down on another, that's where things fall apart. Momentum is lost. And then you go, I didn't find product market fit. I got to go on to the next thing. And I think like companies and people are riddled with a bunch of half-baked product pursuits that never come to full fruition because they simply give up too early. And I think finding that point between, you know, giving up early and also having like this, like just confidence that it's going to work. That's the point that's so important as an entrepreneur to find. I think you find that by simply doing things and doing a lot of things and honing your own intuition because ultimately intuition is, you know, your experience of doing things, knowing what works, what doesn't work. yeah, going from there, I don't know. Again, I said at the beginning, I find it hard to articulate, but for me, it's just so simple. Just fucking go out and do stuff.

 

Pablo Srugo (56:29)

Let me ask, I'm gonna cheat, I'm gonna ask one more question. It's gonna seem super superficial, but I don't think that it is, and it's related to what you're saying. In those early days especially, how much did you work? Like how all in were you, or weren't you? Like honest answer if you think about your days.

 

Tate Hackert (56:46)

I was like a thousand percent in. It's actually an interesting question because in the early days, look, like I grew up in the commercial fishing industry and in the construction industry and everything was a manual task, factory work-esque type thing. And so for me, I always knew that I could outwork someone. In the early days, that was completely true. Customer support, I'd sit on there for 24 hours a day if I could, right?

 

Pablo Srugo (57:18)

This is what, morning to night, like literally like 9 to 9, like this is the reality of it.

 

Tate Hackert (57:21)

Yeah, literally. Yeah. or, or more, right? cause you're just obsessed with like wanting to get this thing off the ground. as the years have gone by though, like transparently, like it is, it is, difficult to outwork people. There are people that work a lot. I don't want to say harder, but know how to work better.

Right? And so that's been a really big shift for me as an executive in a, a, in a organization now is learning that like, can't just put, I can't just like out work in order to maneuver something. I need to actually figure out how to work differently in order to do, do something. But in the early days, like, yeah, man, you just gotta figure out how the hell to do it. You gotta go hard.

 

Pablo Srugo (58:06)

I mean, I ask that because I think I fully believe that I think later on, like 100 employees or more, whatever that is, it's not so much you shouldn't or should or whatever. It's just there are, I think, different ways to do it. And I don't think that you could say this person works 40 or 50, this person works 80. So like they're going to win. But in the early days, I actually do think that. I don't think, know, luck aside, you can really get something off the ground because the ball's not rolling, man. It's a boulder and you got to just push that thing. so if you're not

 

very all in and it really usually is that. It's like 12 hour days, it's weekends, it's in your brain especially, like not just you and your computer, but it's just like your brain is just, is nonstop on that thing. And I just think it's like a necessary condition for success.

 

Tate Hackert (58:51)

I have one more story that I'll share that maybe helps talk through some of that. it's also an interesting product market fit piece. when I graduated university, I moved to Calgary, right? But right actually before coming to Calgary, I went to Ontario for a couple of months. I sold tuna door to door.  Like I literally had a van with samples of tuna loin in the back. And for like two months, I went to almost a hundred restaurants and I sold exactly zero tuna. And so there was an interesting thing in that experience, right? Because this was like my first in-your-face learning. That just because you have a superior product or offering, people might not actually care or even know why it matters. And so what I learned was Ontario didn't really care about a superior product because they were still kind of getting their head wrapped around sushi. And then second, tuna was being used as a loss leader by distributors. So distributors were going to these restaurants, selling tuna for, you know, at a loss. and then securing contracts for more expensive fish. And why that's important is because I think there's a couple of learnings in there that are so analogous to building a business, right? Like just because you have a superior product, just because it's better than everyone else's, doesn't mean that people actually care. You need to tell them or show them why they should care. And then the other thing is sometimes economics don't make sense. Like sometimes people have a beachhead of a business and what you're creating isn't a product, it's actually a feature. And I think you need to really, really be honest with yourself and ask yourself those questions of like, you know, is what I'm doing, you know, a loss leader for others. And am I, am I ever going to be able to get out of this, out of this trap with it? But I think as well, I talk about pulling on threads, right? And so with the tuna specifically, it wasn't just about me saying like, okay, people don't want this. They're not interested. It was instead like asking a bunch of questions of why it's being super curious of the market, but also being super curious of yourself and like focusing on, you know, how do I improve that pitch next time? How do I do this? And so I think like, focusing on the outcome in that regard is super important. I talked about finding product market fit and focusing on this like longer term vision and then everything in between there are sort of just forward momentum and steps that you take towards that longer term vision. so with relating this back to fish, focus on the outcome. The outcome was we had this thesis that, and this was my dad and I, we had this thesis that like we could make money selling fish to restaurants. That was really it. It was like, there's an art play here. We live on Vancouver Island, best fish, you know, in Canada and people in Toronto are not experiencing this and we can bridge that gap. And so we ended up like pivoting and through discovery, we found that, you know, there was a different fish to actually focus on instead of tuna. And within a couple more months and a couple more trips to Toronto, all of a sudden there's four restaurants that are buying from us and then 14 and then 40. And it turns into this big business. so again, I think it's just about having this thesis, having the intuition to go for that, and then continually pivoting on your path to that thesis.

 

Pablo Srugo (1:02:43)

Perfect. Well, Tate, it's been a pleasure speaking with you. Thanks again for jumping on the show.

 

Tate Hackert (1:02:48)

Yeah, thanks buddy, thanks for having me.

Pablo Srugo (1:02:51)

Listen when you go to a restaurant, eat a nice meal, a fancy one, maybe not . Do you leave a tip? I assume, you probably leave a tip. You probably leave a tip 100% of the time. Well guess what? A review is just like a tip and I know you haven’t been leaving one. And just like a waiter that hasn’t been getting a tip, after hours of great service.  I’m getting a little frustrated. So take your phone out, and leave a review. It helps the show move up rankings. It helps us get better guests.  It doesn’t just help me, it helps way more founders. 

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