20VC Why Every Employee Should ReApply For Their Job Every Year & The Strategies To Prepare For A Successful Fundraise with Kyle Hill, Founder & CEO @ HomeHero

In this episode of the 20 Minutes VC, host Harry Stebbings interviews Kyle Hill, co-founder and CEO of HomeHero, a leading nonmedical home care provider in California. Hill shares the origin story of HomeHero, which was inspired by his own family's struggle to find reliable care for his grandmother. He emphasizes the importance of combining high technology with a high-touch experience in the caregiving industry, differentiating HomeHero from other marketplaces by focusing on long-term relationship building rather than transactional services. Hill also discusses the challenges of operating in a highly regulated industry, the shift to employing caregivers as W-2 employees, and the company's commitment to maintaining a strong company culture through transparency and reevaluation of team members' alignment with company values. The conversation also touches on fundraising strategies, including the value of keeping potential investors updated and the importance of understanding one's business inside out to confidently address VC inquiries.

• Harry Stebbings, host of the 20 Minutes VC, congratulates his brother Charlie on graduating from university.
• Kyle Hill, co-founder and CEO of Home Hero, is introduced as the guest.
• Home Hero is a large provider of nonmedical home care in California, with over a million hours of care provided.
• The company has been recognized with awards and featured in major publications.
• Home Hero has raised funds from notable investors such as Social Capital, Jason Calicanis, and Science Inc.
• The importance of design in business success is highlighted, with a recommendation for DesignCrowd.

"Welcome back to the 20 Minutes VC with your host Harry Stebbings at H. Stebbings on Snapchat. Now, before we dive into the show today, I have to say a huge congratulations to my brother Charlie for graduating from university today."

This quote introduces the podcast episode and the host, Harry Stebbings, while also sharing a personal congratulatory message to his brother.

"And I'm delighted to welcome a fantastic founder who's immensely impressed me over the last six months or so in the form of Kyle Hill, co-founder and CEO at Home Hero."

Harry Stebbings introduces the guest, Kyle Hill, providing context about his role and the significance of his company, Home Hero.

• Kyle Hill comes from a technology background and has started several tech companies.
• The inspiration for Home Hero came from watching his father struggle to find care for his grandmother in 2012.
• Hill built an app to help his father schedule and pay caregivers more efficiently, which became the early stages of Home Hero.
• Mike Jones from Science Inc. played a significant role in helping Hill realize the potential of the home care industry.

"I started watching some of the problems my dad was having finding care for my grandmother back in 2012."

Kyle Hill shares the personal experience that led to the creation of Home Hero, highlighting the challenges his family faced in finding reliable care.

"And it was only a matter of time before we were teamed up with science and started building this marketplace."

This quote explains the transition from personal project to a business venture, with the involvement of Science Inc. in scaling up the platform.

• Kyle Hill had a previous connection with Mike Jones from a former venture, Flow Tab.
• Science Inc. provided valuable resources and expertise in SEO and SEM, allowing Home Hero to focus on its core differentiators: technology, process, and operations.
• The incubator experience allowed Home Hero to avoid focusing on non-core business areas like accounting and legal.

"Mike Jones and I have been friends for many years."

The quote establishes the relationship between Kyle Hill and Mike Jones, which played a part in the development of Home Hero.

"We got a lot of help with SEO and SEM. That's kind of their bread and butter."

Kyle Hill acknowledges the support and expertise Science Inc. provided in specific areas, essential for the company's growth.

• Home Hero is a people-intensive business, with the elderly and caregivers as the two main stakeholders.
• The business requires a balance of high technology and high touch to be successful.
• Hill rejects the comparison to Uber, emphasizing the human component of Home Hero's service.
• Marketplaces are categorized into two types: homogeneous (like Uber) and heterogeneous (like Airbnb), with Home Hero falling into the latter category.

"It took us a while to learn. We had to deliver a high technology and a high touch experience."

This quote underlines the dual focus of Home Hero on technology and personalized care, which is crucial for their service model.

"I almost shout on stage, I said, hell no, we're not the Uber for caregiving."

Kyle Hill strongly differentiates Home Hero from other service marketplaces, stressing the importance of the human element in their caregiving service.## Heterogeneous Marketplaces and High Touch Experience

• Heterogeneous marketplaces are characterized by uniquely different units of supply, often involving building relationships.
• High touch experience is crucial in businesses that create long-term relationships.
• The home care business is a high touch industry where technology plays a role, but human interaction is key.
• Learning that in-person visits and long phone calls with clients are acceptable was part of the adaptation process.
• Taking clients to lunch exemplifies the high touch aspect of the business.

"You're building, oftentimes, relationships. You're building human touches. We are in a business where we are creating relationships that will last potentially years." "It took us a while to really learn that going into people's homes to get a new customer was okay, and staying on the phone for 3 hours, maybe not 3 hours, but a couple of hours with a client was okay."

These quotes emphasize the importance of personal interactions and relationship-building in the home care industry, which can lead to lasting connections.

• Successful marketplaces often have loyalty elements where customers return due to the relationship with the provider.
• Loyalty is more significant in services where personal care is involved, like healthcare, compared to impersonal services like transportation.

"I always find successful marketplaces have elements of loyalty baked into them."

This quote highlights the importance of fostering loyalty in marketplace businesses, particularly those involving personal services.

• In contrast to many tech companies' goals, introducing friction can build trust.
• Spending more time with clients can lead to increased trust, which is vital in the home care business.

"I think friction builds trust. A lot of tech companies want to take all the friction out of an experience, but the more time you spend with someone, the more they're going to trust you, and that's very important in this business."

This quote suggests that some level of friction, in the form of time spent, can be beneficial in developing trust within service industries.

• Unit economics is a critical focus for business sustainability, especially when laws and regulations frequently change.
• The business transitioned from being a low-cost marketplace to providing higher quality service at a higher price point.
• Changes, such as converting contractors to W-2 employees, significantly impact unit economics but can lead to better service quality.

"It's my fiduciary duty to focus a lot on unit economics." "We surpassed a million hours of home care in California, and we were operating on much thinner margins, a lower cost." "We decided to convert 100% of our caregivers, or we call them heroes, from 1099 contractors to W-2 employees."

These quotes discuss the importance of unit economics in decision-making and the strategic shift towards higher quality service at increased costs due to changes in employment status.

• Emphasis on unit economics is necessary in highly regulated industries affected by laws related to minimum wage and overtime.
• In the early stages, startups may prioritize customer experience over margins, sometimes at a financial loss.
• Learning from mistakes and avoiding repetition is a part of startup growth.

"We're not placing too much emphasis on it when we're constantly being bombarded with minimum wage laws and overtime laws." "In the early days, when you're still figuring out, what are we doing, like chamath and social. Plus, in the early days, they really didn't harp too much on what our margins were."

These quotes reflect the balance between financial restraint and the need to navigate a complex regulatory environment, as well as the early startup focus on customer experience.

• Technology mistakes, such as time tracking errors, can impact client billing and trust.
• Innovations like geofencing for caregivers introduced new challenges that needed quick learning and adaptation.
• Mistakes were addressed by providing customer credits and learning from the experience.

"Very rarely did we make a human screw up. It was usually a technology screw up." "We were causing a lot of problems from the technology side because we were doing things that had never been done before."

These quotes highlight the technological challenges faced in the home care marketplace and the importance of addressing mistakes to maintain customer trust.

• Having influential supporters like science and well-connected individuals can facilitate warm introductions to investors.
• Being prepared and learning from initial fundraising rejections is crucial.
• Knowledge of one's business and anticipation of potential investor questions is vital for fundraising success.

"You didn't well, I think one thing we did well is we had science on our side." "And Chamath is actually an investor in science. And so there was a little double dipping there going on." "We knew our business so well that there was not a single question that they could ask us that we hadn't been asked before."

These quotes discuss the advantages of having strong backers during fundraising and the importance of thorough preparation and deep understanding of one's business when engaging with potential investors.## Pitching to Investors

• Understanding one's own business is essential when pitching to investors, not just improving pitching skills.
• Confidence and familiarity with the business can make tough questions easier to handle.
• A personal connection or relevance to the investor's life can significantly influence their interest and decision.

"It's not that you get good at pitching, it's just you understand your business more than anybody else and you're not afraid of any tough question."

This quote emphasizes the importance of deeply understanding one's business rather than just focusing on the pitching technique.

"And coincidentally enough, Chamath's father had just had triple bypass surgery and he had flown across the country to care for him and find a caregiver."

The quote illustrates how personal experiences can resonate with investors and impact their investment decisions.

• Respect is crucial for founders from VCs, regardless of whether there is agreement on the business.
• Constructive criticism is expected, but it should be delivered respectfully.
• Founders should be open to acknowledging what they don't know and commit to researching and providing answers later.

"Respect is really important to me and I think that they need to understand that when I walk in that door, I'm putting my heart and soul into this business."

This quote underscores the emotional investment founders have in their businesses and the expectation of respect from investors.

"It's really that you're asking questions that I may not have a really good answer for, and it's okay to say, hey, you know what? I don't know that. But I'll get back to you on that."

The quote reflects the appropriate attitude founders should have when faced with challenging questions from VCs.

• Continuously engaging potential investors through updates is beneficial, even outside of active fundraising periods.
• Keeping investors informed helps them track progress and maintains a relationship.
• Tailoring communication and respecting investors' preferences for updates is important as the business grows.

"One thing that Mike and I did, even in the really early days, is we would send monthly newsletters out to all of our kind of investor network."

This quote demonstrates the proactive approach to keeping potential and current investors informed and engaged.

"So now I have to be a little, lot more careful with just spamming VCs. And I built much stronger relationships with them."

The quote indicates the evolution of communication strategies with investors as relationships mature and grow.

• Belief in solving a significant problem can provide protection and confidence in one's business.
• Awareness of industry trends and statistics can validate the business's relevance and potential for growth.
• Comparing oneself to competitors and other market players can offer reassurance about being on the right track.

"I knew that we were in the right industry because this was, I mean, I'll give you some stats. It just blew me away."

This quote reveals the importance of industry research and understanding market statistics to reinforce confidence in the business.

"You just have to have that confidence that you are solving a real problem. You're solving a big problem and it's only going to become bigger."

The quote captures the essence of maintaining belief in the business's mission and the significance of the problem it addresses, especially when facing rejection from investors.## Favorite Blog or Newsletter

• Kyle Hill, a design enthusiast, prefers thebestdesigns.com for inspiration.
• The site showcases beautifully designed websites.

I'm a design guy, so I like thebestdesigns.com. It's a design site with just beautiful kick ass looking sites and I get a lot of inspiration there.

This quote highlights Kyle Hill's interest in design and where he draws inspiration from, which is thebestdesigns.com, a website featuring well-designed sites.

• Kyle Hill's company has 30 employees and a few hundred caregivers.
• Company culture is emphasized, with transparency being a key value.
• Chamath Palihapitiya, an investor, influenced their focus on authentic company culture.
• A team retreat led to the creation of nine value statements.
• The company practices public communication and transparency.

And so building that culture and just really staying true to that is extremely important. You cannot undervalue the importance of culture and really living by it.

Kyle Hill explains the critical importance of maintaining and living by the company culture, which is a foundational aspect of their business philosophy.

• Value statements are displayed on walls and included in offer letters.
• Employees annually self-assess based on the company's value statements and share with the team.
• The company practices a reapplication process every January to ensure employee and company alignment.
• This process is meant to refresh commitment and ensure employees are engaged with the mission.

Before someone accepts an offer, they have to read all of the value statements and know what they're signing up for.

This quote indicates the company's proactive approach to ensuring that potential employees are aligned with the company's values before joining.

• The reapplication process is designed to reaffirm the employees' commitment to the job.
• It creates a sense of unity and rejuvenation post-process despite initial fear and uncertainty.
• The process helps maintain a workforce that is motivated beyond just financial compensation.

And it's not that we sit here and try to talk people out of working here. It's just you really want people that they're not here for the paycheck, and they're not here because they have legacy and they've been here a long time.

Kyle Hill clarifies that the reapplication process is not meant to deter employees but to ensure they are genuinely motivated by the company's mission.

• Kyle Hill's favorite book is "Black Swan" by Nassim Nicholas Taleb.
• The book discusses the impact of highly improbable events.

God, I like Black Swan. I thought it was such a fascinating book.

This quote expresses Kyle Hill's admiration for "Black Swan," indicating its influence on his thinking.

• Home Hero's future is tied to healthcare legislation, particularly the Affordable Care Act.
• The shift from volume-based to quality-based hospital payments has created opportunities.
• Home Hero is partnering with hospitals to provide cost-effective post-acute care options.
• The industry is moving towards home care as the default, with potential partnerships between hospitals and non-medical home care providers.
• Kyle Hill anticipates a future where non-medical home care is reimbursable by Medicare and Medicaid.

And so what I see in the industry and in our role in that is that there is going to be less reliance on skilled nursing facilities and medical home health, and going home is going to be the default option.

Kyle Hill predicts a shift in the healthcare industry towards home care, with less reliance on traditional skilled nursing facilities, reflecting Home Hero's strategic positioning.

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