This week’s featured founder is Nick Alexander, co-founder of Yoshi. Yoshi is disrupting an industry that I am sure NONE of you ever thought about disrupting: gas stations and auto maintenance. Did you ever say to yourself, “You know, gas distribution really needs to be revamped?” Well, Nick and his co-founders did and are making significant waves in eight major markets.
This week’s featured founder is Nick Alexander,, co-founder of Yoshi. Yoshi is disrupting an industry that I am sure NONE of you ever thought about disrupting: gas stations and auto maintenance. Did you ever say to yourself, “You know, gas distribution really needs to be revamped?” Well, Nick and his co-founders did and are making significant waves in 20 major markets.
Nick is an alum of Y Combinator, not just one time but THREE times. So prepare to learn from an incredible founder who is doing big things. Y Combinator is an accelerator that provides guidance to early-stage companies to help them get to a point where they have built something impressive enough to raise money on a large scale. It is not easy to get into as the competition is very high. Companies like Airbnb, Dropbox, Stripe, Instacart, DoorDash, and many, many more have gone through Y Combinator. All that to say…Nick’s three tours through YC is so incredibly impressive.
Have I hyped his story enough? Are you as excited to unpack his entrepreneurial journey as I am? Awesome! I mean, with a resume like his, entrepreneurship must have been on his radar from the very beginning, right? Well, let’s find out. This is Nick Alexander’s startup story.
“The story is ALWAYS much more glamorous on the outside than it is on the inside. This is the case for even the most successful startups.”
—Nick Alexander, Yoshi
Nick Alexander on LinkedIn:https://www.linkedin.com/in/ndalexander/
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Special Guest: Nick Alexander.
The Startup Story - Nick Alexander
Nick Alexander: Hi. This is Nick Alexander. I'm the cofounder of Yoshi, and this is MY startup story.
James McKinney: Every wildfire began with a spark. Every superhero has an origin story. And every single startup has a moment that they point to as their beginning. And every founder has a purpose that drove them in the midst of all obstacles. THAT is The Startup Story.
James McKinney: Welcome to episode 39 of The Startup Story. Now, after 39 episodes, if you've listened to all of them, then you know I have never started off by mentioning what episode number it is. Well, this week's a little different because it took 39 weeks for someone to plug their brand in an iTunes review. So Dallas1908 gave the show a five start rating and wrote, "I love hearing how fellow entrepreneurs have launched and run their businesses. I own ValetMaids.com, a residential cleaning company in Dallas that has easy online booking and scheduling. Listeners in the Dallas area can get 20% off their first cleaning with the code 'startup.'"
Hey, I keep my promises, and thank you ValetMaids.com for writing that review. I hope our Dallas listeners will utilize the discount code you offered. This ad will live on for years to come, so don't shut that code down anytime soon. So if you have found any value in The Startup Story, please leave a written review on iTunes and plug your brand, URL, or social media accounts. Just like ValetMaids.com has experienced, it becomes a mini ad and it's just my way of saying thank you for taking the time to leave a review. The written reviews really do mean a lot for being discovered within the iTunes platform. The algorithm weights written reviews significantly heavier than just plugging in the stars, so please if you found any value, leave a written review.
Now, let's jump into this week's episode. Our guest today is Nick Alexander, cofounder of Yoshi. Yoshi is disrupting an industry that I am sure none of you have ever thought about disrupting - gas stations and auto maintenance. Am I right? Did you ever say to yourself, "You know what? Gas distribution needs to be revamped." Well, Nick and his cofounders did, and they are making significant waves in major markets. The fact that Nick and his team is looking to redo the gas distribution model is impressive enough and would make for an amazing episode. But when you add the fact that Nick is an alum of Y Combinator, not just one time but three times, it definitely gives you reason to sit up and prepare to tune in to learn from an incredible founder who is doing big things. Now, just in case there's someone out there who is unaware of Y Combinator, Y Combinator is an accelerator based out of the San Francisco bay area that provides guidance to early stage companies to help them get to a point where they have built something impressive enough to raise money on a large scale. It's not easy to get into Y Combinator. Competition is super high, and companies like Airbnb, DropBox, Stripe, Instacart, Door Dash, and many, many more have gone through Y Combinator. All that to say Nick's three tours through Y Combinator is incredibly impressive. So have I hyped his story enough? Are you as excited to unpack his entrepreneurial journey as I am? Awesome. I mean, with a resume like his, entrepreneurship must have been on his radar from the very beginning, right?
Nick Alexander: I don't think I even knew the word entrepreneurship. It wasn't something I grew up with. I was a pretty math and sciency. I really liked those subjects. I kind of thought I wanted to be a doctor. I remember not really knowing. I remember when I went away to college, I just assumed I would be a doctor because it seemed that's what I was supposed to maybe do.
James McKinney: Were your parents doctors? What did that idea come from?
Nick Alexander: No, no. I don't know. It just seemed like my favorite high school subject was chemistry. That turned out really to be mostly due to the teacher. When I got to college, I started taking chemistry and realized I didn't like it at all. I was into the sciences. Doctors. I liked the idea of helping people and if you forced me to chose what I thought my career would be back then based on that information, I would have said doctor. But I didn't really know and so pretty early on into college, I kind of uncovered this idea of startups and entrepreneurship, and dove in pretty quickly to that track.
James McKinney: So being the oldest, and I too am the oldest, I'm one of three. Then parents split, then another two so I'm one of five. So I know a little bit about the… we are the ones that our parents learn how to parent off of. We're the ones that they have high expectations for in some cases, or they're just learning along the way. So as the oldest, and the only boy, did you feel any pressure from a career trajectory as you entered the college years?
Nick Alexander: I don't know if I felt any pressure. I was the oldest and the only boy, and I think I felt my parents had a lot of faith in me. I was kind of the one blazing the trail. I didn't really have any direction on what to do. I wasn't following in footsteps I guess, and so I that I felt the responsibility to figure something out. But other than that, I don't think I was pushed in any one direction. I did feel I had kind of carte blanche to blaze my own trail there.
James McKinney: Got it. So being that you didn't have any entrepreneurial leaning in the high school years, there probably weren't any side hustles. There weren't any money making endeavors I assume. And so as you're transitioning to college and you're thinking that doctor is what you want to be, does that mean you chose Ivy league? What college did you go to, and then when you entered college, was it about premed?
Nick Alexander: Actually, the first bit of now I'm connecting the dots in hindsight and realizing, first bit of entrepreneurship was actually right before I started college. So the summer I got a job at the local newspaper. I was making I remember $5.25 an hour. The job was to literally copy and paste from one text file. They were basically trying to convert everything to like an HTML format that they could put a… and they had newspaper files from like 1960s that literally my job was to copy and paste. I was just happy to have a job.
James McKinney: What year was this? Can we put a date stamp on this? What year was this?
Nick Alexander: Yeah, this was 2005. I had decided to go to Duke. I was excited about that, but I had the summer to work and try to make some money. After like three days of literally copy and pasting files, I was working with one other guy. I was like, "Dude, this is insane. This is the worst job ever." It was my first job and the worst job ever. There's got to be a better way to do this. I didn't know anything about programming, but I knew that it was a thing. There were no programming classes at the high school back then in Kent, Ohio. They didn't teach that. Maybe they do now. But I knew enough to there's got to be a way. All these formats are exactly the same. There's got to be a way that we can write a computer program and automate this some way.
I remember going to my boss, who was the owner of the paper, and I told him, "Hey, this is literally going to…" I did the math. "This will take like 25 man years to do all of these and by the end of the summer, we're not even going to be out of the mid 60s. This makes no sense. I actually think that, I've done a little research online and I actually think we could probably write a program to do it." He basically was like, "No, no, don't do that. That's not why I'm paying you. Just do what you're told and 25 man years sounds all right. We'll just… we're not in a rush." Then after another day or two, I was like this is ridiculous. So during the work day for the next two weeks, it was kind of like this stealth operation. We were like reading up on programming.
James McKinney: You and this guy you worked with?
Nick Alexander: Yeah. We were reading up. It was in Python. Learning how. Back, now that I've studied computer science and worked and stuff, it should have taken like two hours to write the required program. It was very basic stuff, but coming in from it fresh took basically two weeks and way more line to code than necessary. By the end of the summer, we had a working program and we had basically done all the files.
James McKinney: All the copy and pasting?
Nick Alexander: Yeah. We had converted all… once we got the program working and debugged it and stuff, it took like an hour to run or less than that. So we finished the entire job by the end of the summer. Now, I remember the boss too, not to throw him under the bus too bad but he wasn't very appreciative I remember. We were like, "Hey, we kind of did what you told us not to." He was like, "What? Oh, okay, whatever."
James McKinney: We did 25 man years in the matter of a summer.
Nick Alexander: Yeah. I kind of went into college that fall having just done that, but having signed up for premed, but starting to have my eye more on engineering and computer stuff. So by the second semester that first year, freshman year, I had dropped orgo and I had switched everything and I was computer engineering as the major I had chosen and ended up doing.
James McKinney: So when you were developing that program, again one of the reasons that I love The Startup Story, and my listeners know that I never submit questions ahead of time. This is always a chance for them to listen in on two entrepreneurs having a conversation about the journey. One of the things I love about it is it's, like you said connecting those breadcrumbs and those dots. Now looking back on that moment, was there any time when you were developing this, either you or the guy you were doing this with, did you think I wonder if I could sell this? Or was it really just for the task and function at hand?
Nick Alexander: I thought that we could probably sell it and at the very least, I thought that the guy… I do remember kind of posing this to him and he dismissed it immediately, but say this was going to take 25 man years, you were going to pay X tens of thousands of dollars or whatever, you want to pay us some of that money? And he immediately was like, "What the hell? No, no way." I didn't have any more experience than that, and I kind of just dropped it.
But I do remember thinking hey, not only is this going to be more fun for the summer, but we should definitely, we're definitely going to make money on this right, because we're saving so much. Didn't work out, but…
James McKinney: It reminds me of, see that was 2005. My first technology startup was 2011, so this must have been around 2009. There was a kid, a 17 year old out of the UK, and it reminds me because again, you wrote this script to do this copy and paste job. Must have been 2009 I think it was out of UK, this 17 year old wrote a script that really just scraped headlines. It was like a news headline aggregator and Yahoo bought it for $100 million.
Nick Alexander: Wow.
James McKinney: It's just, it's during those early days, you created a script like that. It's amazing what things could have sold for. So your second semester at Duke, you now switch to computer sciences, or computer science. During that journey, and you hear a lot of stories of technology founders, again if they are entrepreneurial in spirit and not just wanting to be product developers, you hear these stories of entrepreneurs finding each other in college. Was there any of those moments for you during your college years since you were in computer sciences?
Nick Alexander: Oh yeah, yeah. That was a big part of my college years. The first thing that I got involved with, with my cofounder Breck Unitz, was Quick Duke. We made a very simple homepage that, talk about going viral. It really did. It was basically used by everyone on campus. It was a very simple website that just had all the links conveniently in one spot, it had a Google search bar, and everyone basically set it as their homepage.
James McKinney: Links to what? Links to just resources on campus?
Nick Alexander: Yeah. All the, there's like the Blackboard link that was the internal tool, there was a link to Facebook, all the popular links that most students were using were there, nice layout. That was our first startup.
James McKinney: What made you want to create that though? Just something to hack together?
Nick Alexander: I think there was motivation. There really wasn't a good solution out there like everyone had a ton of bookmarks. This is back in the early day browser. Chrome wasn't even around. Everybody was using IE.
James McKinney: Firefox was the hot thing at the time.
Nick Alexander: Firefox was hot, yeah, but IE was probably the dominant one. The school had a ton of links just as a student. There's the link to your courses, and the links to the dining hall, and everything. So there was a need for it. We knew how to make a website. I think I had just learned it so it was a cool application of that.
James McKinney: What did that evolve into and what was your next startup?
Nick Alexander: Well for about two years there, it was just our thing and we ran it. I think it made a tiny amount of money.
James McKinney: Banner advertising and stuff like that?
Nick Alexander: Yeah we tried running ads and stuff, and sometimes we would get some people would buy ads, and very manual process there. But we ended up selling it after I graduated. We sold it to the school newspaper for like $20,000, which was a huge… I mean that was huge. I think it's still around, QuickDuke.com. They've completely redesigned it, but yeah it's kind of still going.
James McKinney: That's pretty cool. So that was your only venture through college or was that just one of a few different things you had going?
Nick Alexander: No, that was one of a few. I did one called Blue Tunes. It was kind of like a Spotify, way ahead of its time. I did that with Andrew Furst.
James McKinney: And so, let's see 2005 this is probably 2006 or 2007 at this time. I forget the year of Napster. I forget when that was a thing. So when you say Spotify, my mind tells me that was the Napster years so how was it closer to Spotify versus just-
Nick Alexander: Napster had already been a thing and kind of come and gone. This was more about, it was an iTunes in the cloud. So you would upload your music and then we had a mobile player that was in the browser that you could log in from anywhere. So we would be often times spending all night in the lab down in the basement of the computer engineering. You're on these big computers and there's no music. Oh, I don't have my laptop with all my music. Back then, there was no Spotify. There was no streaming service. So you would upload your music into Blue Tunes and then you would be able to just log into a browser anywhere and basically have an ITunes like interface to play it. That was a big project actually for the last year or two of college.
James McKinney: Usually we don't unpack the technical side of things. But I'm super intrigued on this one. Not that it's relevant per se, but I'm thinking at the time, before all this streaming stuff, I had 100 gigs of music, just a tremendous library. Would users upload their independent libraries and that's all they had access to, or did it become like a sharing component to it?
Nick Alexander: This is actually our innovation. This was our big IP. So I was working on it with a guy named Andrew Furst, who's a genius, still is. He's out there doing a very successful startup right now in San Francisco. He built a fingerprinting algorithm by himself that would fingerprint the tracks on the client side and be able to tell if we already had that song in the cloud. So you would only upload one version of each song. Now, you wouldn't really know that was going on as the user, but would upload very quickly and it would… we were literally bootstrapping this thing. I don't even think we knew what the term bootstrap was, but there was no human concept of raising money. We had to fund this thing. Just S3 and AWS had just come out very recently. It was a hot thing. We were storing it in S3 but we certainly weren't going to pay more than we had to. So yeah, that was kind of the big innovation I would say is that we were only uploading the song once.
James McKinney: You know it's interesting because in hearing this, I've been an Apple product user for so long and I remember when iTunes match came on board, and it was very much that. Once it could identify what was in your library, you had the ability to stream and it sounds very similar. You were ahead of that is what this sounds like.
Nick Alexander: Oh yeah. It was leading edge stuff. Actually, looking back, it was pretty amazing. We didn't get a ton of users. We did get a few and we got a couple Tech Crunch articles while we were students, which was awesome. We thought it was a big deal. That, we actually had a tiny little exit as well with that startup.
James McKinney: Who did that sell to?
Nick Alexander: So it sold to a company called My Media, which unfortunately I don't think exists, but it was kind of a venture funded startup, trying to do something similar. After a couple years, we were kind of giving up on trying. We were actually making a little money. We had some pro users. There was something like the first 100 songs were free or whatever, somehow we were monetizing. It was self sustaining, but to a very small scale. We were making $100 a month in profit, but we got acquired by a venture funded startup.
James McKinney: That's fantastic. And again, you're still in, as we're going down this path you're still at Duke at this time still, correct?
Nick Alexander: Yeah, although I think I was out of Duke when we sold it. I had just graduated.
James McKinney: So you have these two ventures that both have an exit. At what point when you graduate Duke, what was your first… or as you're approaching graduation we'll say, what was your thought on what you were going to do? Were you thinking I want to just keep starting my own things at this point, or were you thinking I want to work for one of the big tech firms and be under product or something?
Nick Alexander: I think I wanted to start my own thing, but I also needed money. I had interned at Sysco and I was planning on starting there. So I was going to graduate in 2009 in the spring, and I mentioned Breck Unitz, cofounder of Quick Duke, he was a couple years older than me. He had moved out to San Francisco already and doing stuff. Had gotten to know this guy named Paul Graham, Y Combinator. Wasn't a big thing back then, but was starting to get formed. He called me up one day. He's like, "Hey." It was the fall of 2008. So I was a senior, and he's like, "Hey, I got an interview for this thing called Y Combinator and it's like next week, and I met this guy named Paul Graham and he'll give us like $20,000 to get a business started, starting in January if we get accepted. Can you fly out to San Francisco?" I'm like, "Wow, okay, sure. What's the idea?" He's like, "Well, okay, we've got like a week to figure that out." So long story short, we got accepted. I actually ended up, I had enough credits to graduate a semester early. I wasn't planning on doing that, but I could and so I actually flew out to California January 2009 to start in Y Combinator with the business called Tiny Coupon.
James McKinney: 2009, Tiny Coupon, are we in the Groupon era?
Nick Alexander: No, it was before Groupon. This was more similar to Retail Me Not, if you're familiar with that. So actually very similar. So we were scraping coupons. We had the largest coupon index in the world we like to say. I think we had more coupons than Retail Me Not, as if that was like the metric of success. Yeah, affiliate links we would be able to earn money if somebody clicked on one of our links and ended up buying or something. So that was the idea that we were working on.
James McKinney: So you went into Y Combinator with Tiny Coupon, and the business model for you, the monetization was on affiliates, so that's a volume play. So inside of that, and again one of the amazing things about Y Combinator, obviously you were probably what cohort number one or two at that point? You were really early.
Nick Alexander: Not that early, but yeah it was early. There were only 14 teams in the batch back then.
James McKinney: Okay. One of the great things about Y Combinator is just the access you have to other founders, the learnings that you have in sitting with them and from them. And being that your monetization was based on affiliate, and that is a pure volume play, what did you learn from your time in Y Combinator? Because you're really just about user acquisition at that point.
Nick Alexander: I learned a ton. That was an amazing kind of extension of college. Name of the game for us is it was all SEO. Actually, the coupon space, I mean it's even funny to call it that, but now it's a big space. It wasn't really big back then. It was us and Retail Me Not, and Retail Me Not obviously ended up winning, but we were doing okay. The way people would search is like, "Hey, I want to shop at Sears or Walmart.com," and then I type in the word "coupon" or "promo code" or "discount," and we would rank very high for that stuff. In some cases, we started experimenting with paying for traffic as well on Google. It was usually a clear ROI, if you know some very, very valuable key words that we knew we were going to make money on, and we could pay 10¢ a click, but make an average of 20¢ per visit to the site, we started doing that too.
James McKinney: Okay. What happened during TinyCoupon? You said obviously Retail Me Not won out. What happened with TinyCoupon, and what was that journey? How did it come to an end?
Nick Alexander: That one just kind of fizzled out. We never raised money, so demo day came and went. It wasn't really a… we weren't trying to raise money. Honestly, I was a little young. I didn't even really think that was a thing to do. It was kind of more of a lifestyle business I guess. We'd have months where we were making an okay amount of money and it was kind of, we were trying to grow it. After a year or so, so I went back to YC with a new startup. This is 2011, so it was an evolution of what I think I'd learned at TinyCoupon. The new startup was called Fresh Plum, and it was kind of like hey, we were for the stuff I was doing on TinyCoupon there was a lot of tools we were building and stats and data science. Back then, the buzz word was big data, starting to be machine learning was a new thing, and data science was a brand new buzz word. What we started to realize from talking to others and my cofounder, these tools that we were building, other people would pay for, kind of cutting edge stuff. This business is fine, but we're really excited about coupons as a passion.
James McKinney: Coupons are super sexy, I'm just telling you that.
Nick Alexander: Well yeah, yeah. We didn't think so back then, we were 22. We wanted to do something even cooler and so we're like, we met with Paul Graham again, we're like, "Hey, check out some of this. We have an idea for a new business. We can get people to pay for these data science tools." He's like, "Oh, great. You should do YC again. It's starting up in a week." We basically did that and went through back in 2011 again.
James McKinney: What was your learning in YC that time around?
Nick Alexander: It was different. YC had grown a lot in the two years, so I remember the first batch, there were 14 teams and then two years there were like 60 or 70 teams in the batch. Frankly, I don't think we learned as much the second time through because a lot of it was a bit repetitive, and it wasn't the same environment as it was in those early years.
James McKinney: What was different?
Nick Alexander: Well, the biggest thing were the dinners. The dinners used to be YC has grown and evolved, and in some ways a lot better, but the dinners have definitely gotten worse. The dinners back in 2009 were amazing, literally amazing speakers, like the Twitter founders, the YouTube founders, PayPal founder. It was an off the record talk with somewhere around 20 people in the room. The stories were amazing. They were off the record. They were things that you would never say, but they were very truthful and insightful and real. Definitely the highlight of the experience for me back then, every week there would be every Tuesday we would have one of these dinners, and they were amazing.
In 2011, there were 60 teams so there were more like 100 people in the room. It wasn't as… no one's going to open up in an auditorium full of people like they will around a dinner table. So they turned into, you can watch a lot of those things on YouTube frankly.
James McKinney: Looking back on your, I know you've gone through YC I think a third time as well, right?
Nick Alexander: Mm-hmm.
James McKinney: So we'll talk about that in a second. In just looking back in general at your YC journey, are there relationships that came out of your YC journeys? Is there a community that you developed from that journey and that carries you still today?
Nick Alexander: Yeah. There's a lot of people I've met through YC and I'm still in touch with. I'd say YC back in 2009, the best part were probably the dinners and the community wasn't that big, but you did meet some people. Now it's probably the community is one of the biggest, if not the biggest, thing to take out of it. You're meeting a ton of founders and they've done a really good job of actually building infrastructure around YC. There's an internal website that is very resourceful and stuff. That's been a big part of it is the community.
James McKinney: Awesome. So back to your second time through YC with Fresh Plum, what happened with Fresh Plum?
Nick Alexander: That one got acquired after about three years. We got acquired by what was then a startup called Telepart, which turned out to be a big success of a startup. It got bought by Twitter shortly after they bought Fresh Plum. It was in a fairly similar space, different from it. Big data and ad retargeting and stuff like that.
James McKinney: How many cofounders were a part of Fresh Plum?
Nick Alexander: It was three of us.
James McKinney: So it's three of you, you get acquired. How old are you at the time?
Nick Alexander: I was about 26 or so.
James McKinney: So you're 26 years old, there's three founders. You get acquired by Telepart. Maybe life changing money, never the less significant money. What was your thought process at the time? Contractually, you probably had to stay on board for a period of time, like it probably wasn't just sell and walk away, so what was that transition like for you? Were you just on a cloud because this was the goal for you, or was there a bit of ownership like oh wait, do we really want to sell this, and was there any turmoil whatsoever internally?
Nick Alexander: So it was an interesting time for me because I was considering going to business school, so there's a parallel track here where back in college, I had applied to business school and gotten in but they said you had to work for two years first. It was this new program they were doing. It was kind of along the lines of I didn't know what I wanted to do when graduating college. They basically said you have to work for two years, and then you can start. So that two years came up and I was starting Fresh Plum. I basically told them I'm not coming, I'm starting this new business, we were very excited about it. They gave me an extension for a year, like okay, you can defer for a year. Then I was Fresh Plum was still going. They gave me another extension for two years, and they wouldn't give me an extension for a third year. It was right around when the acquisition was happening. So I basically decided to go. I wasn't super keen on the big data, ad retargeting space and I had kind of been thinking about this business school opportunity, and it was now or never type of thing. I basically went, started business school right after that.
James McKinney: So you were really already disconnecting a bit we'll say emotionally from Fresh Plumb right before the acquisition anyway, so this wasn't a heartburn for you for the sale of it.
Nick Alexander: that's right, yeah. And the sale honestly took a while. It was a long process so we kind of knew it was coming for many months before it finally did.
James McKinney: That's an interesting point for all those listening. How long, from the talks to the closing, was that acquisition process?
Nick Alexander: Maybe a number of months, more than a few. Probably three to six months or somewhere in there. It's a little hazy but yeah, it's not quick.
James McKinney: So you're in business school then, and that is an interesting point in thinking back along your other startups. You are a developer. Obviously, incredibly intelligent developer, went through Duke, all the other things, but sometimes we think of the product before the business and so now, would you say looking back on those three endeavors that it was product before business, or did you see business and then product?
Nick Alexander: Oh no, I think we were more… we weren't thinking about the business up front. It was more about this is something cool people might want and we could definitely build it. I'm sure there's a way to make money, but that was thought of second.
James McKinney: Got it. So after Fresh Plum, you're in business school. Once you completed business school, did you go back into another startup? Did you work for a big company at this point? What was your path post Fresh Plum?
Nick Alexander: That's where Yoshi comes into play. Business school was two years. I interned at Google in the summer. Second year, I had met my cofounder of Yoshi, Brian Frist, and we liked each other. We were both kind of entrepreneurial minded. We were starting to think about maybe we should start something out of school. Didn't really want to go back to Google. I thought about it and part of me was like yeah, maybe I should get a little big company experience for a bit. But we were brainstorming things to do.
James McKinney: So you were in, you went to business school for the business learning side of it correct?
Nick Alexander: Yeah, business learning.
James McKinney: And Brian was there, and if I'm not mistaken he's not a developer, correct?
Nick Alexander: No.
James McKinney: I forget exactly what his background is, but I know it was definitely not in technology.
Nick Alexander: No. It was more operation strategy.
James McKinney: So you guys connect, and what school did you guys go to? What business school?
Nick Alexander: Harvard.
James McKinney: Harvard. So you guys connect at Harvard and this is in 2013 I think?
Nick Alexander: Yep.
James McKinney: So you're in Harvard 2013 and you two connect. You're developer technology, he's operations, both incredibly brilliant people. How does the conversation begin to develop for what becomes Yoshi? And I guess before we even get started, why don't you just share a little bit about what Yoshi is so that our listeners have a framework for Yoshi as we begin to unpack the early days of it.
Nick Alexander: Sure. So Yoshi makes it so you never have to worry about stopping for gas, oil change, car wash, or anything to do with your car again. We come by. We've got trucks and we'll come by and usually while you're parked at work during the day, we fill you up with gas. If you want a car wash, we do that. If you need your tires aired up, we do that. All the routine maintenance car items that normally you would have had to do yourself, we take care of for you.
James McKinney: Awesome. Subscription service, pay as you go?
Nick Alexander: Subscription service. If you're a Yoshi member, you get service usually every week. Most people get filled up per week, although that's customizable. The price per gas that you pay is competitive to the gas station. We'll actually match the lowest priced gas station within a radius around where your car is parked. That's what Yoshi is. We can get all into that. We've been at it since those early days.
James McKinney: So you and Brian are at Harvard, you're brainstorming together, you're enjoying working together. You're both intelligent. This had to have started somewhere. There had to have been an incident somewhere where it's like, "Man, I wish there was a Yoshi around," or whatever it was at the time. How did this even come to mind? I know you probably weren't playing Mario Kart and that's where it came from. How did this come to be?
Nick Alexander: We were kind of in the mode of thinking about ideas, and graduation was looming, and neither of us wanted to go into whatever, consulting or something terrible like that. So we were prying into ideas. We wanted to… we had narrowed it down. We wanted to do something. I had kind of been thinking with the lens that I wanted to do something people cared about. With Fresh Plum and coupons even before that, who cares? Big data, we're optimizing, e-commerce websites, can't even really explain what we do and certainly no one cares. I wanted to do something people really would be excited about. Probably something more consumer facing, so that was kind of the lens we were operating within, and we were actively thinking about it.
Then the kind of eureka moment that we remember is we were driving around campus and running late, and the Boston winter/spring, spring feels like winter, basically was running late and almost ran out of gas and had to stop at a gas station, terrible experience, pumps broken, it's sleeting almost, and we're like man, talk about… We were already thinking what's something, what's a pain point, what's a big industry. Gas stations, talk about something that is a pain point. No one likes, I'd run out of gas on the side of the road before. No one likes doing it. Doesn't seem like it's really changed much since about 1910. Huge industry obviously. That's where we started, like huh, what would it look like if that was rethought today? We did some brainstorming on it, did some spread sheeting using our business school skills to well, what would the margins be, and what's the business model. For about a week, we kind of just dug into, but then decided to just go for it.
James McKinney: So Yoshi was, whereas the other ones were product and business, Yoshi was very much business and then build the product for something that made sense.
Nick Alexander: Yeah. We had done our homework to think it made sense. Now, in hindsight we didn't really know what we were talking about. But we at least I think certainly tried to do more of the business modeling beforehand on Yoshi than I had in the past.
James McKinney: And when you think back to the early days, again I'm envisioning the early days of Yoshi being like, "Hey, you know what, we'll go to a gas station with a bunch of tanks and we'll fill up, and we'll just have a little bit of a margin on top of those gallons that we have, and we'll charge per service delivery of the gas or whatever the case may be." I'm thinking that's the MVP of Yoshi, but that's probably not true. So when you go back to the early days of Yoshi, what was the MVP of Yoshi? How did you prove that this was something that people were going to be attracted to?
Nick Alexander: You're not too far off. That was about the MVP. So we got started, we went from the, "Let's do this," to pumping gas in about a week. The way it looked was, so me and Brian, we were both in Boston. Then we're like we need that truck, where are we going to get the gas and how do we transport it around? So I called up my friend Dan who was back here in the Bay Area, just old friend of mine, used to be a roommate. I knew him as kind of the mechanical guru. He was always rebuilding. You'd go to his house and he'd have a car engine disassembled on the kitchen table and there's grease everywhere, and you'd open up the fridge and there's like brake pads, like what the hell is going on here. Sometimes, it's funny to think back but as a roommate, you're like, "You've got to clean up the… what's going on."
Obviously, I'm like I'm talking to Brian, I'm like, "Hey, I know a guy back in California who we need to get him on the phone and see what he thinks about this." So like, "Hey Dan, here's the idea. We think we might need some sort of like a gas truck." Dan was like, "Oh, no problem. I'll have it done this weekend." We're like, "Whoa, whoa. We're not sure if we're going to do it yet. Don't. We didn't say start building anything." But basically he started, he's like, "No, no, I love this idea. I'm going to start." So he built the first gas truck on the back of his own Ford Ranger within a few days, very simple. Had one tank, didn't hold that much gas, but had a pump, had the basics covered.
James McKinney: I'm sure it was totally fully OSHA approved, double walled.
Nick Alexander: Yeah, safety was a concern because we were the ones driving it. But so yeah, the tank was DOT approved. You bought the tank, it was safe. We had a couple people look it over to make sure that it was safe, but yeah, he got that going. I was the developer so I started getting to work on an app.
James McKinney: So from the get go, your vision for this was an app.
Nick Alexander: Yeah.
James McKinney: It wasn't just a, well I mean I guess technically it had to have been an app in some way. I was trying to think how do you, again back to MVP, how do you prove it?
Nick Alexander: We tried to do it as cheaply and leanly as possible, but I was able to make an app so I did that in something like a weekend. It was very jankie. Dan got the truck built and then, so Brian and I, it was a right at the end of the school year. I remember there was basically like a month between classes and graduation. Most people are like going on exotic vacations somewhere, going to Ibiza. I don't even know where that is, but that's where everyone's going.
We flew out the day after classes end or whatever and started driving around the truck in Palo Alto. Had the app fired up and we start telling everyone we know, "Hey, we've got a gas truck. Put in your credit card and we'll come fill you up." We did that for the first month. We did that for longer than that, but there's that month timeframe before graduation that we were doing it. That's how we… Within that first month, I think the feedback from customers was very clear. People wanted this.
First 10 or 15 customers were people we knew, but pretty quickly, it was a cool thing. We would start to get signups like whoa, who's this? Who's got the Camry at Stanford Campus? I don't know, hey how'd you hear about us? Oh, John I work with, John said there's this new thing. I hate going to the gas station. Can I get it too? It's like wow. So it really did start to spread outside of just our network. So we were pretty convinced early on that it could work.
James McKinney: What year is this?
Nick Alexander: This is 2015.
James McKinney: And as we're talking, I'm wondering if as you, in the early days, if you're looking at this thinking man, gas stations, they're dependent on real estate whereas you're not. Now you're mobilizing gas stations.
Nick Alexander: Yeah.
James McKinney: That's incredible. Was that the thought process early on for Yoshi, was mobilizing gas stations and defeating, getting beyond the real estate boundaries, or was it about servicing just the consumer?
Nick Alexander: Well from a business model perspective, we thought gas stations have a lot of costs. Take something like a couple million bucks or something to get a gas station up and running. They're not actually good for the environment. You put these big tanks underground, they could leak and they're expensive to permit and inspect and insure. From a business model perspective, that was the thought was our trucks are, Dan built this thing in a weekend. Obviously, that wasn't the final version but we could get these trucks up and running for much more cheaply, no rent. And so we actually have a lower cost structure than a gas station does. We can take out a lot of costs and deliver the same product at a competitive price, but way more conveniently.
James McKinney: And you can enter markets a whole lot faster and a whole lot cheaper as well.
Nick Alexander: Yeah. So that was one of the next things is we were doing this in Palo Alto. Fairly early on, we were starting to talk about financing and what are we going to do for… Frankly, I didn't even really want to raise money.
James McKinney: Why?
Nick Alexander: Well, you know we had done that for Fresh Plum. It seemed like the ultimate is to do something that you don't need to do that. Why give up some of the company and some of the control? It was also a huge hassle just to go through the fundraising process. So if you don't need to, we were making money.
James McKinney: And you bootstrapped it all yourself. You developed it.
Nick Alexander: The first truck, yeah. First truck or maybe two. These were cheap. We didn't have much, but a few thousand bucks each or something is all it took. But we started to think, when we started to talk about some of the fundraising, one of the first questions we were getting is all right, yeah this works in Silicon Valley, is it going to work anywhere else? You guys are living in a bubble. And so we're like hm. We quickly wanted to say we want to get this moving somewhere else, and so we chose Nashville, Tennessee as the second market fairly early on to say that hey, this is… and it actually worked very well in Nashville, and some of our fastest growing markets now are places you wouldn't expect. We kind of proved to ourselves and to other people that this is something that can work anywhere.
James McKinney: That is amazing. So 2015 is when this started. We're now four years in. Obviously, to scale, even though you didn't want to raise money you had to raise money, at least I'm assuming so, whether it be debt financing. Let me rephrase that. Instead of raising money, you had to bring in financing in some way, shape, or form whether it be debt financing or investors. What year was that?
Nick Alexander: I think we raised money the first kind of C stage checks that year 2015, later in the year. The first maybe few trucks we were doing ourselves and got to a point all right, wait a second, how much can we pour in and what's the strategy here. I actually remember, I haven't thought of this in a while but we got a call from or an email randomly from who I thought was a big shot. He is a big shot, Steven Sinofsky. He probably doesn't remember this, but he's a long time Microsoft guy that works at Andreessen Horowitz. Random email out of the blue, he emailed some random address he found online. He's like, "Hey, I want to meet you guys. My wife started using this service and I work at Andreessen Horowitz. I think this could be big." We're like whoa. So we kind of didn't, in theory maybe we could avoid raising money but as soon as we started getting some interest, it's like oh whoa, this would make things a lot easier. We went down the path of venture funding. So we went back through Y Combinator.
James McKinney: With Yoshi?
Nick Alexander: Yeah.
James McKinney: So now myself included but maybe some listeners, you have a business that is making money. You have investors that are interested. What is the value of Y Combinator for you at this point in time for Yoshi?
Nick Alexander: We did have some investors and some interest and some product. I wasn't really thinking about it. I remember we had a chat with Sam Altman, who's one of the people in charge of Y Combinator, and I think we were looking for more advice at the time. He kind of said, "Oh, this is a great idea, you should do YC." We thought we'd get some customers out of it. YC had grown to be a huge thing and there's a lot of companies. A lot of them have offices around the Bay Area and maybe we could start getting customers out of it. We had raised some money but we needed to raise more, and we thought it might help with that. I had been through YC personally, but Brian and Dan had not. I think they were kind of excited to check it out. So when they kind of encouraged us to do it, it didn't take too much convincing. We're like yeah, maybe this would be worthwhile.
James McKinney: Awesome, that is awesome. So what is the current state of Yoshi now? What markets are you in? How big is your fleet? How many employees? Are the drivers employees, is it a gig type of economy? What is the current state of Yoshi?
Nick Alexander: We are alive in 20 metro areas. We raised a series A from GM Ventures and Exxon Mobile.
James McKinney: From an oil and car company.
Nick Alexander: Yeah, yeah.
James McKinney: Interesting, okay.
Nick Alexander: We were very excited about that. We are growing in all of our 20 cities. We've started to really hit our sweet spot with offering Yoshi as an employee perk in a lot of corporate campuses, so we have a stat that the average commuter spends somewhere around 30 hours a year on car maintenance and all the trips to the gas station if you add everything up. So getting employers to roll this out to their employees and give back a big chunk of time has been a big source.
We're also doing some very cool stuff with new cars and connected vehicles, so this is one of the interests that GM had when we started to work with them. All new cars starting in 2018 are now "connected" which means they're basically an IOT device, there's sensors and there's the data being sent up to the cloud. Despite that, you can't really do anything with that today. There are no really good applications. You could download, if you have a brand new car, you can download the app for it and remotely maybe honk the horn on the car, but why would you even want to do that? Maybe once a year.
Yoshi is actually a really cool application because we can take down a lot of the diagnostic data and provide optimized service. So now, and we are doing this starting with GM cars, where if you have a new car and you use Yoshi, you've connected it in the back end so we're integrated. You might be driving and you park your car, and you get a notification from Yoshi that says, "Hey, we know that your tire is low on air," or, "We know that you're due for an oil change," or, "We know that your windshield fluid is low." Tap one button and we'll fix it the next time we come by for a fill up. So doing some cool stuff with that sort of integration straight into the car.
James McKinney: That is incredible, especially when you think about the idea being that you know where the car is at, you know all the information for it. You have the ability to pop the gas cap if necessary. A person with an overriding authority statement could get a full tank and not even be aware of it. Just get in the car, have a full tank, I've been treated.
Nick Alexander: That's the use case we built for. So we like to say it's a set it and forget it service. So best case scenario, you have Yoshi set up on a weekly say how often you need gas, so we say we're coming every Monday. Monday comes, you don't even need to know we're coming. We send you a couple notifications in the app and stuff, but you don't really need to do anything. You don't need to know. You'll get an email receipt later that day that says, "Hey, by the way your tank is full of gas. We'll see you again next week. By the way, next week we're also schedule to wash your car and change your oil." And stuff like that. We like it to be completely seamless. Once you kind of get set up the first time, our goal ironically in a lot of apps and companies are all worried about engagement and how often you open the app. Our goal is you don't even have to open the app at all after kind of you get setup and started.
James McKinney: That's really pretty… that's quite amazing. How many employees does Yoshi have?
Nick Alexander: So we have over 100 people across the board. So you asked about drivers. These are not gig economy workers like that. We call them field technicians. They are employees. We put them through training and they have to have the right certifications and stuff. We're very selective with that. They're part of the team.
James McKinney: So what, as I look through this journey, I think man there are so many elements to Yoshi that were foreign to your previous startup journeys. This is so operational heavy. Granted, Brian being the expert on the operations and you on the technology side, but nevertheless for the first couple years, and maybe even still until now, you had to be involved operationally because they meet each other at some point. And so when you think through the journey, was there any point in time and maybe even up until last night that you thought to yourself how in God's name are we ever going to pull this off?
Nick Alexander: Well yeah, certainly. There's a lot of moving parts and the way I kind of look at it and Brian and Dan, the whole team, you've got to appreciate the journey because it has been laborious, and it's been highs and lows. Working with the field technicians and the fact that we're doing something… this isn't some sort of app only and no real world component. We are out, we have people every day out in the wild actually doing stuff, actually interacting with customers, making it so people can get to work and go about their day. It adds extra complexity certainly, but also adds I'd say some extra rewards to it. It's not coupons. It's not something behind the scenes just crunching numbers in the background.
James McKinney: When you look back on your journey, and as our time comes to an end there's two questions I ask every founder. I believe that if we forget all the people that helped contribute to where we are today, we begin to think we did it all ourselves and we begin to isolate ourselves and ultimately that's going to lead to our failure, because we can't do these things alone. So when you look back on your journey, who are the people that you point to with such immense gratitude for their contribution to your journey?
Nick Alexander: Wow, we could go another hour just on that, but there's been a lot. One story that comes to mind, and the people in the field, the field techs, I don't think I would have guessed how important of a role, I'm maybe not proud of this, but I don't think I would have guessed how important of a role they played when we were first spread sheeting it out. They've been a tremendous asset to have. We've got some really great people. One story that comes to mind, Wayne started as a field tech out here, and what a guy. When we first started the company, it was just gas and now we're doing tires and car washes and oil changes. That actually all came from him. So Wayne was, it wasn't scripted this way, but we found out that Wayne was of his own volition squeegeeing everyone's window when they filled their car up. We didn't even know.
I think we found out because one day Wayne was sick and took a day off, and I was driving the truck or something and customers started complaining, like, "Hey, my windows are filthy. The guy didn't clean them today." We're like, "What are you talking about? We never do that." They're like, "Oh no, yes he does. He does a good job on them too." Wayne, this is going to sound crazy, but are you squeegeeing people's windows? He's like, "Yeah, absolutely I have." "All right, who told you to do that? Where'd you get the equipment?" He's like, "Oh, I bought it at Auto Zone, no big deal. Some of these people had filthy windows. I thought they'd like it." We're like okay, that's interesting, but stop doing that. That's not the job. We're not really paying you to do that, you've got to stop with the squeegeeing.
Eventually, people kept complaining like, "Oh, this service is going real downhill. I'd pay more if someone squeegeed my windows, and frankly I could also use an oil change." That is the first insight that I can recall like hey, you know what actually, there's a whole other side of the business here. Gas is great and people need it every week, and that's a nice touch point to have, but there's also a lot of other things that they need on their car, and they're actually getting mad at us when we're not doing it. So I'd say collectively if I had to choose one person who has been, or one group, it's the field techs. We've had some of them now with us basically the whole journey and they've been huge.
James McKinney: That is awesome. I love hearing those stories of employees that are just all in on servicing the clients and delivering a great experience. That is, Wayne, well done. That is awesome, that is awesome. So the last question as our time comes to an end, and man this has flown by. We've been talking to tens of thousands of listeners right now, sharing entrepreneurial journey. We've been speaking at a very high level. But I like to think of The Startup Story as a digital mentor.
So for this moment right now, I'd like for you to just kind of speak one on one with one of our listener personas. Those personas are the current entrepreneur who's just frustrated with the lack of traction they're getting. Maybe it's not the journey they thought it's going to be. Or maybe this person is working a 9 to 5, he's got a book full of dreams and they're the want- trepreneur, but maybe they're married with kids and they think that their time is passed already and entrepreneurship is sailed off. Or maybe they're 60 and they think they're too old for it. Or the last one is the defeated entrepreneur, an entrepreneur who has been punched in the gut time and time again, had multiple failures to their resume. Whatever the case may be, but they're about ready to just hang their hat and call it quits. If you were to have coffee with one of those people and you could pick whatever one it is you want, what would you say to that person right now in their journey?
Nick Alexander: This is one of the big things that YC gives you is the networking. I was actually talking to another founder from our YC batch earlier today and catching up. The story is always much more glamorous on the outside than it ever is internally. No matter, I've seen ones that are really successful by every metric, and still it's hard times and there's struggles, and almost missing payroll. There's a lot of problems. There's some messy, messy splits. Those happen even in the most successful. There's still a lot of successful ones that it's even worse than that. So stick with it.
One thing Paul Graham always used to say, he still says it but I remember him saying it back in the early days was the only way to fail in a startup is to give up. You haven't actually failed until you actually say it's over and give up. So I've seen plenty of success stories where it was a long journey. So back in '09 when I was in YC the first time, we had the Airbnb guys, they've got some great anecdotes of selling cereal boxes to try and pay the rent. Talk about a success story that came out of it, but it was, there were hard times. I've seen a lot of other ones that have had hard times.
It's easier said than done, but you've got to learn to appreciate the journey. Try to appreciate. Celebrate the wins. You've got to celebrate the wins. I'm usually the one who has to be reminded to celebrate the wins. Brian's better at that, because even when you have a win there's like 10 other problems that came up that day. But you have to celebrate the wins. Take all the losses and try to find the positive, and shrug them off, and just keep… Our mantra at Yoshi is keep moving. I'd say that's the one piece of advice. It's not going to be easy, it's not supposed to be easy. If it was, anyone could do it, but just keep moving and you won't fail until you give up.
James McKinney: What an incredible startup story Nick just shared with us. In fact, I want to take a second to think about what Nick and his cofounders Brian Frist and Dan Hunter are doing. It sounds like a simple concept, right? Mobile gas and routine auto service. But when you peel back just a layer or two, you can see they are completely rethinking the gas distribution business model for consumers. Unless you're in a market where Yoshi operates, you have to go to the gas station to get your gas. In fact, it's been that way for over a century. A little fun fact for you in case you get into trivia sometime, the first gas station or filling station as it used to be called, opened on December 1, 1913 in Pittsburgh. So for over a century, we have only known one way when it comes to getting gas into our vehicles.
I'm sure there are some listeners right now that are thinking at some point, electric cars are going to be all there is on the road. Well, as email and online usage increase, people said the same thing about junk mail and mail order catalogs. How did that turn out for you huh? What I'm getting at is that many of us have fallen into the trap of thinking that will never work, or there's no way people will want it. In fact, I remember thinking about a mobile oil change and tire rotation service in 1999, but never moved on it because it seemed too cumbersome at the time.
If there's anything I hope you get out of hearing Nick's startup story, is that there's still so much opportunity out there to innovate. Is it going to be hard? Of course it's going to be hard. That's why nobody has done it yet, and maybe, just maybe, you are the one who is supposed to solve for it.
I hope you have found value in Nick's startup story, and if you've been around The Startup Story for any length of time, then you know how much emphasis I put on the idea that entrepreneurs support other entrepreneurs. So if you have found any value in Nick's startup story, then there are three easy ways we can support Nick in his entrepreneurial journey. The first? Download the Yoshi app today. That's an easy one, right? Just go into the iOS story or Google Playstore and download the Yoshi app. Two, tell a friend about Yoshi as well and hover over them until they download the app. And three, and for those who really want to show up in a big way to support Nick and the entire Yoshi team, tell a business owner or someone in HR about offering Yoshi to their employees as an incredible employee perk. Again, entrepreneurs support other entrepreneurs, so let's make sure to show up for Nick Alexander in a major way.
And now for my personal ask. The Startup Story community has been so incredible about sharing our podcast with others, but we have more stories to tell and more people to reach. We too are a startup and word of mouth is everything, so please follow us on Facebook and Instagram @TheStartupStory or on Twitter @StartupStory_. If you're on LinkedIn, please search for The Startup Story and follow our company page. LinkedIn is a really powerful way to raise awareness of the show. But the most impactful way you can help us grow our audience is to leave a review on Apple Podcast. Or if you listen to the show via Spotify, then please simply share the podcast directly from your Spotify app or wherever you listen to the show.
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If you like this podcast and are thinking of creating your own, consider talking to my producer Danny Ozment. He helps thought leaders, influencers, executives, and authors create, launch, and produce podcasts that grow their business and make a real impact in this world. You can contact him today at emeraldcitypro.com/startupstory.